IFRS 5

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September 24, 2010 at 6:17 pm #45362
sambhu
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HI,frnds
let an asset having a carrying amount of 10 m was revalued to 20 m
and in the next year it is classified as held for sale and valued at 15 m but the CV IS 19 m
then how will be the treatment in SFP and IS
please answer
September 27, 2010 at 7:24 am #68671
daycask
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In the current year the assets is revalued, in SOFP it will be stated at [Revalued amount(-)depreciation(-)impairment (if any)] with a subsequent increase in the equity (Revaluation reserve) and the revised depreciation will be charged in SOCI.

Under IFRS 5, an asset is classify as held for sale if its CV will b recovered principally thru a sale transaction rather than its continuing use and have to meet all the criteria.

An asset held for sale should not be depreciated, therefore no depreciation charged to SOCI, but any gains/losses thru its sale will be reflected in SOCI in the year of sale, and in SOFP it should b measured at the lower of its CV and FV(-)CTS.

Hope this answer helps. Pls correct me for any mistake as I’m studying for this paper as well.
September 27, 2010 at 3:08 pm #68672
Anonymous
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Answering off the cuff

Please note that all revaluation credits are to be carried under the heading Revaluation Surplus not revaluation reserves

End of Year 1 Non-Current Asset (“NCA”)Schedule
Revalued Amount $20m
Less: Carrying Value $10m
Revaluation Surplus (“Rev Sup”) $10M

Dr NCA $10m
Cr Rev Sup $10m

Statement of Financial Position (extract)
Non-Current Asset
Property Plant And Equipment $20m

Equity attributable to OWners of the entity
Revaluation Surplus $10m

End of Year 2 Non-Current Asset (“NCA”)Schedule
Carrying Value $20m
Less: Depreciation for the year $1M
Carrying Value $19m
Fair Value ($15m)
Impairment Loss $4M

Revaluation Surplus Realised on recognition of Depreciation
(20-10)m/20yr = $0.5m

Dr Rev Sup $0.5m
Cr Retained Earnings $0.5m

Impairment Loss of $4m recognised in Revaluation Surplus

Dr Rev Sup $4m
Cr NCA $4m

Statement of Financial Position (extract)
Non-Current Asset
Property Plant And Equipment (reclassified as NCA Held for sale)

Current Asset
NCA Held for Sale $15m

Equity Attributable to Owners of the Entity
Revaluation Surplus (10-4.0-0.5) $5.5m
Retained Earnings (“R.E.”) $XXm
Rev Sup Recognised in R.E. +$0.5m

Income Statement (extract)
Depreciation ($1m)
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