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in the qs i bill of june 2011 ,there is a develoment property which is now loss making as it was estimated to have profit of 200000 but now costs are incurred as 350000.
i wrote the answer before reading the actual ,that there is a indicator of impairment on this asset ,its a internal indicator as property requires further structural improvements ,but the actual answer had no any mention of this thing ,other than that loss should be recognised immediately .
was that correct of me to write about impairment ,,or its wrong ..
The end result is the same whether you call it an impairment of recognition of a forecast loss – whichever way you go it involves a substantial debit to the statement of profit or loss
I got the feeling, as I read the question, that it was a question targeting financial reporting associated with construction contracts rather than a question aimed at recoverable amounts and values in use – it’s no coincidence that the question specifically states “Bill Co is a property development company …”
To that end, I’m leaning towards loss recognition rather than to impairment expensing
But as I said at the start, the end result is an expense of $150,000 in the statement of profit or loss so I don’t believe that you will lose heavily
OK?
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