Why is the expected profit not taken into calculations on the question attached below:
" The factory plant has a carrying amount of $ 2.2m, but is only expected to sell for $ 500,000, incurring $ 50,000 of selling costs. The factory itself is expected to sell for a profit of $1.2m.
What is the profit or loss on discontinued operation relating to the property, plant and equipment for the year ended 30 Sep 20x3?
Answer: loss $ 1,750,000
Workings :2,200,000-(500,000-50,000)"
Thank you
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Discontinued Operation
9y ago
9y ago#1Hmm, that's tricky
First question - are you 100% sure that you have given me full details AND that you have read the question correctly
If everything is fine ... then I don't know why the profit on the factory has been ignored
Maybe it's because of this extract from IFRS 5:
"Presentation
Assets classified as held for sale, and the assets and liabilities included within a disposal group classified as held for sale, must be presented separately on the face of the statement of financial position. [IFRS 5.38]"
But I'm not convinced
Sorry :-(
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