Question

Miller Company, a company who uses IFRS reporting standards, sells a non-current asset classified as held-for-sale....

Miller Company, a company who uses IFRS reporting standards, sells a non-current asset classified as held-for-sale. Which of the following statements is true regarding the treatment of a gain on a subsequent increase in the fair value less cost? The gain should be recognized but only in retained earnings. The gain should not be recognized. The gain should be recognized to the extent that it is not in excess of the cumulative impairment loss that has been recognized. The gain should be recognized in full in the income statement

Homework Answers

Answer #1

As per IFRS, when non current assets or disposal groups are classified as held for sale, they are measured at the lower of the carrying amount fair value less cost to sell. Any subsequent increases in fair value less cost to sell of the asset can be recognized in profit and loss to the extent that it is not in excess of the cumulative impairment loss that has been recognized. Therefore the third statement given in the question is true (i.e. The gain should be recognized to the extent that it is not in excess of the cumulative impairment loss that has been recognized).

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