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Profit on sale of non-current asset (Property)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Profit on sale of non-current asset (Property)

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Kim Smith.
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  • August 19, 2021 at 2:39 pm #632135
    RazaHussain7292
    Member
    • Topics: 7
    • Replies: 5
    • ☆

    If we sold a non-current asset (Property) has a carrying value of $ 500,000. Property is held at cost less depreciation model. On 30-Sep-2020 we sold it for $ 750,000, bit at that date its fair value was 600,000.

    Now please guide if we should recognize $ 250,000 (750,000 -500,000) as profit on sale?
    Or we should recognize profit of $ 150,000 (750,000 – 600,000) and $ 100,000 (600,000 – 500,000) will be recognized in other comprehensive income?

    Please guide. Thanks

    August 19, 2021 at 2:54 pm #632137
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6794
    • ☆☆☆☆☆

    IFRS 13 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”.

    So proceeds cannot be so markedly different to fair value.

    In any case, proceeds are the proceeds and the profit/loss is the difference between proceeds and carrying amount.

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