• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

ACCA WEBINAR for AAA, APM and AFM Professional Skills 7 July, Noon (BST) Register now >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

IFRS 5

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IFRS 5

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Stephen Widberg.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 3, 2021 at 8:35 am #619509
    dvamfire
    • Topics: 36
    • Replies: 29
    • ☆☆

    A machinery with a carrying amount of $20,000 is classified as held for sale in December 20X6. Its fair value less costs to sell was estimated as $18,000 and it is sold for $16,500 on 15 February 20X7. The 20X6 financial statements are authorised for issue by the board on 15 March 20X7. The company accountant has recognised the machinery in the SOFP at $ 18000 and is of the opinion that as the sale took place the following year it should not impact 20X6 financial statements. He is also concerned that this may reduce the current year’s profit.

    Answer :
    In accordance with IAS10 this will be treated as an adjusting event as it provides evidence of conditions that existed at the end of the reporting period. The machine should be measured at $16,500 as a held for sale asset in the 20X6 financial statements. This is also in compliance with IFRS 5 which states that for Assets Held for Sale must be measured at lower of CV and FV less Cost to sell and an impairment loss ($18,000 – $16,500 = $1500) must be recognised to SOPL

    My question : i am confused why the machine is measured at 16500, not 18000.
    I thought we need to compare ca and fv less cts… so i take ca 20k then compare with fv less cts 18k. Impairment loss is 2k. But I am unsure about the 16500.

    When we dispose it, we should recog gain or loss right?

    May 4, 2021 at 9:54 am #619624
    Stephen Widberg
    Moderator
    • Topics: 10
    • Replies: 2531
    • ☆☆☆☆☆

    If you become aware of the sales proceeds before you sign the accounts, which is usually at least 3 months after the year end, you would use the sales proceeds as evidence of the value of the asset at the SFP date.

    So, I’m with the answer on this – I would treat it as adjusting..

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Geply on ACCA Taxation (TX-UK) Basis periods for capital allowances part 3
  • praveenmasih on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • John Moffat on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures
  • seef on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures
  • hiiradomar on MA Chapter 1 Questions Accounting for Management

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy