FR NCA

At what amount should a non-current asset held for sale be measured?

• 1. Lower of carrying amount and fair value

• 1. Lower of carrying amount and fair value less costs to sell

• 1. Higher of carrying amount and fair value

• 1. Higher of carrying amount and fair value less costs to sell

During the year to 30 April 20X9, two companies carried out major re-organisations of their activities. The re-organisations were as follows:

Maynard closed down its manufacturing division on 1 January 20X9. This division accounted for 30% of Maynard’s revenue, Maynard will now focus all of their efforts on its retail division.

Grant purchased a group of companies in February 20X9. One of the subsidiaries within the group, Lytton, did not meet the profile required by Grant and therefore the intention of Grant is to sell this subsidiary as soon as possible, and no later than 30 September 20X9.

Which of these re-organisations would be classified as discontinued operations for the year ended 30 April 20X9?

• 1. Maynard only

• 1. Lytton only

• 1. Both Maynard and Lytton

• 1. Neither Maynard or Lytton

Which qualitative characteristic of financial information is most enhanced by the separate disclosure of discontinued operations?

• 1. Faithful representation

• 1. Comparability

• 1. Understandability

• 1. Relevance

For an asset to be classified as held for sale in accordance with IFRS 5, it must be available for immediate sale in its present condition and the sale must be highly probable.

Which of the following conditions would most likely satisfy the highly probable criterion?

• 1. The asset is being marketed at a reasonable price for its nature and condition

• 1. A board meeting has been arranged to discuss sale of the asset

• 1. Disposal of the asset will not adversely affect the entity’s operations

• 1. When the asset is sold the entity will use the funds to pay a dividend

At 31 March 20X5, Rushworth had a property with a carrying amount in the financial statements of $20m and a remaining useful life of 40 years. On 30 September it was decided that the property should be sold and it was placed with a property agent. Selling costs were estimated at $1.5m. The property is being marketed at a price of $35m although the directors have been advised that they should accept offers around $33m. At 31 March 20X6, the property remained unsold although a number of buyers had expressed an interest.

At what amount should the property be reported in the statement of financial position at 31 March 20X6?

• 1. $19.75m

• 1. $20m

• 1. $31.5m

• 1. $33.5m

PQ has ceased operations overseas in the current accounting period. This resulted in the closure of a number of small retail outlets.

Which of the following costs would be excluded from the loss on discontinued operations?

• 1. Loss on the disposal of the retail outlets

• 1. Redundancy costs for overseas staff

• 1. Cost of restructuring head office as a result of closing the overseas operations

• 1. Trading losses of the overseas retail outlets up to the date of closure

On 1 January 20X0 Beech purchased an asset for $500,000, the asset had a useful life of eight years and no residual value.

On 1 July 20X3 the asset was classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinuing Activities. On that date the fair value less cost of disposing of the asset were assessed as $254,000.

What is the total expense to be recognised in respect of this asset in the statement of profit or loss for the year ended 31 December 20X3?

• 1. $31,250

• 1. $56,650

• 1. $58,500

• 1. $62,500

For an asset to be classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinuing Activities, the sale of the asset must be highly probable.

Which TWO of the following are indicators that the sale of the asset is highly probable?

• 1. The asset has been advertised for sale in a trade journal

• 1. A contract with a buyer has been signed

• 1. The market value of similar assets is $50,000 and management hopes to sell the asset for a profit of $30,000

• 1. Necessary repairs to the asset will be carried out when management has signed a contract for the sale

As at 30 September 20X3 Dune’s property in its statement of financial position was:

Property at cost (useful life 15 years)$45m

Accumulated depreciation$6m

On 1 April 20X4, Dune decided to sell the property. The property is being marketed by a property agent at a price of $42m, which was considered a reasonably achievable price at that date. The expected costs to sell have been agreed at $1m. Recent market transactions suggest that actual selling prices achieved for this type of property in the current market conditions are 10% less than the price at which they are marketed.

At 30 September 20X4 the property has not been sold.

At what amount should the property be reported in Dune’s statement of financial position as at 30 September 20X4?

• 1. $36.0m

• 1. .$37.5m

• 1. $36.8m

• 1. $42.0m