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Sept 2016 Specimen Exam Question Q24

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Sept 2016 Specimen Exam Question Q24

  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 19, 2016 at 11:32 pm #334130
    andrewmark89
    Member
    • Topics: 4
    • Replies: 7
    • ☆

    Sir,

    My question relates to the following point: (Q24)

    “The Factory’s Plant had a carrying value of $2.2m, but is only expected to sell for $500,000, incurring $50,000 of selling costs. The factory itself is expected to sell for a profit of $1.2m”

    The question corresponding to this point is:

    What is the profit or loss on discontinued ops relating to PPE for the year ended….

    A) 1.75m loss
    B) 1.75m profit
    C) 550,000 loss
    D) 550,000 profit

    I got the answer for the 1.75m loss, however I was wondering why we didnt net off that loss against the 1.2m profit of the factory. Is it not part of the PPE?

    Thank you for your time,

    Warm Regards
    Andrew

    August 20, 2016 at 7:58 am #334157
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    Paragraph 38 from the IFRS says:

    ‘Presentation

    Assets classified as held for sale, and the assets and liabilities included within a disposal group classified as held for sale, must be presented separately on the face of the statement of financial position’

    OK?

    But it’s a strange one isn’t it!

    PPE is the abbreviation for Property, Plant and Equipment so what part of the factory isn’t property?

    August 20, 2016 at 6:28 pm #334254
    andrewmark89
    Member
    • Topics: 4
    • Replies: 7
    • ☆

    yes EXACTLY, I was like, but factory is part of PPE no?

    Thank you so much, this clears it right up!

    Best Regards
    Andrew

    August 20, 2016 at 6:30 pm #334256
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22698
    • ☆☆☆☆☆

    You’re welcome 🙂

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    Posts
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