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Relating to c part of the qs the marking scheme says “In addition, even if the property had been correctly classified, it has been valued incorrectly. IFRS 5 requires assets held for sale to be valued at the lower of their carrying amount or fair value less costs to sell. The property should have been valued at its carrying amount of $20 million, not at the eventual sale proceeds of $27 million”.
Shouldnt the carrying amt be 19m considering the depreciation charge f 1m?since the property was classified as held fr sale at the yr end ,the depriciatn charge should be charged isnt it?
As I know,once the property is classified as NCAHFS then there is no depreciation to the asset. remember the asset is under Current Asset as a single presentation. I am not sure but hope you can solve this.
I know dep is nt provided fr after classification bt here the property was classified as such only at the year end.therefore isnt it correct to charge the dep for the year on the property?
Oh, sorry for the misunderstanding. I understand what you’re saying now. I think you’re right as we know when an asset becomes held-for sale we have to first charge depreciation up to date when we decide to sell.
I guess the examined answer was focused on the value despite giving the most accurate figure. Btw, because I am not seeing the whole question, so I am not so clear about it. But going thru for what you mention, I agree you by that.
Hmm…ya thts what i also think.need to make sure with the tutor. R u taking p2 exam this time
Hi,
If the asset was acquired at the start of the year with the intention to sell it then its value would have been $20m, as it states in the answer, and it wouldn’t be depreciated as classified immediately as held for sale.
The key however is that this is all essentially irrelevant because the asset shouldn’t be classified as being held for sale as it cannot be sold in its present condition as it needs to be repaired.
Thanks
But wudnt tht be a contradiction to ifrs 5 fr nt charging the depreciation just because the mgt had the intention to sell?the standard clearly states dep could b charged until classification as held for sale.Although i appreciate tht this is not relevant is there any chance f losing marks on this one?
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