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@amyisabella said:
Try, rather than use the answers, use your notes. You may not be able to complete a question by yourself. But by reading the question and identifying what they’re asking for, go through your notes and find the corresponding subject. Answer the question using your notes (even if it’s just copying out a definition) and relate it to the question. This will help you to remember what you answered as you put the work in to find the solution, and it will help with the whole ‘relating the answer to the question’.Thank you Amy, your approach seems to be promising 🙂
@P2-D2 said:
Prior to transferring to a NCA-HFS, assets held under the revaluation model are revalued to fair value first ($15.4m) and then the IFRS 5 treatment is used.Thanks
but sir, what about this question in kaplan Study test TYU-12 Non current asset ,
On 1 January 20X1, AB acquires a building for $200,000 with an
expected life of 50 years. On 31 December 20X4 AB puts the building up
for immediate sale. Costs to sell the building are estimated at $10,000.
Required
Outline the accounting treatment of the above if the building had a
fair value at 31 December 20X4 of:
(a) $220,000
(b) $110,000.The suggested solution is as below:
Until 31 December 20X4 the building is a normal non-current asset and
its accounting treatment is prescribed by IAS 16. The annual depreciation
charge was $4,000 ($200,000/50). As such, the carrying amount at 31
December 20X4, prior to reclassification, was $184,000 ($200,000 – (4
× $4,000)).
(a) On 31 December 20X4 the building is reclassified as a non-current
asset held for sale. It is measured at the lower of carrying amount
($184,000) and fair value less costs to sell ($220,000 – $10,000 =
$210,000). This means that the building will continue to be
measured at $184,000.(b) On 31 December 20X4 the building is reclassified as a non-current
asset held for sale. It is measured at the lower of carrying amount
($184,000) and fair value less costs to sell ($110,000 – $10,000 =
$100,000). The building will therefore be measured at $100,000 as
at 31 December 20X4. An impairment loss of $84,000 ($184,000 –
$100,000) will be charged to the statement of profit or loss.what I am confused about is the answer to part b, why the building was still recognized at its carrying value i.e 184,000 rather than revaluing it to its fair value i.e 220,000. Isn’t it supposed to be recognized at its fair value as on 31st Dec 20×4, before recognizing it as NCA-HFS?
Similarly in the same question regarding asset held for sale, why is the asset revalued to $15.4 m, although its carrying amount is $13.9 m, as per the suggested answer it is stated that revaluation is done as the fair value is material, I found it contradicting with IFRS 5 provision which states that asset should be carried at lower of its carried value and fair value less cost to sell. so shouldn’t the asset be valued at $13.9 m?
Kindly help sir, this thing is really getting over my head.p.s Question has given its value in use of $15.18 m as well.
Sir i have confusion in the same question
My confusion is that while arriving at the IHT already paid of 75000 for CLT they have used the nil rate band already so why are they using the same nil rate band to cover the PET.
The technical article says that if PET has occured before CLT then the NRB has to be used first for the PET. So aren’t we using the same NRB twice ??
Sir can u please expalin me where am i missing out the point??thanks sir i got it now 🙂 🙂
and samh i am very hard working person and pressed ctrl +C and ctrl+v to type that question. if you knw what i mean 😀 😀thank you sir by the way i have doubt ?? can i post more than 1 question per day or is there any limit for posting the question by a user in a day??
Sir, Thank you so much for the fast and illustrative response.
so sir all you meant to say that is the early settlement discount is not actually the reduction in the purchase price of the machine but it is rather a incomed gained during the purchase process which has to be recorded as income in income statement and written off in the same year??
and that is the accounting entry is made as soon as the assets is purchased irrespective of early settlementment discount??
sir why cant we produce full 100000 units of display screen instead of producing full 100000 units of keypad because from the examiners answer of part a the incremental cost of buying is more for the display screen i.e (0.416/unit for display screen and 0.18625/unit for key pad ) so aren’t we incurring more cost by buying display screen because the dispaly screen costs relatively more to buy than that of keypad???
sir i dont know why am getting so much confused from the examiners answer this thing is turning me crazy
