Question

A non current asset is classified as held for sale. On the date of classification, immediately prior to the transfer to the 'held for sale' classification, the asset had: a cost of $100 000, accumulated depreciation of $40 000(10% per annum, straight line over 4 years); and accumulated impairment losses in terms of IAS 36 of $15 000. The asset was then impaired in terms of IFRS 5 by $10 000. Asume that the above asset had not yet been sold at the end of the following reporting date, at which point its fair value less cost to sell was $75 000.

Answer 1

Non current asset is classified as held for sale then it has to sale within 12 months after classification of asset to held for sale. It will go current asset

Book value (Carrying value) = Total asset cost - Accumulated Depreciation

Book value (Carrying value) = 100000 - 40000

Book value (Carrying value) = 60000

Asset impairment

Carrying value < Recoverable amount

then there will be no impairment

Carrying value > Recoverable amount

there will be impairment then we have to check fair value of asset

In this question there is already incurred impairment

As per IAS 36 $ 15000

As per IFRS 5 $ 10000

That means company had accumulated impairment loss $25000 which means company will no longer use of this asset.

Asset Current Book value = Carrying value - Impairment Loss

Asset Current Book value = $60000 - $ 25000

Asset Current Book value = $ 35000

Company had determined fair valur less cost to sell = 75000/-

Then while reporting in the financial statement There will be increase in value of asset $ 40000 which is in held for sale that can show in unrealised profit and loss account Cr. $ 40000 (Other comprehensive )