Question

equipment, which is classified as property, plant and equipment(IAS 16) and measured using the cost model, is to be transferred to the'held for sale' classification. It has a cost of $242 000 and its accumulated depreciation to date of transfer $48 400. This asset has never been impaired. On the date of transfer: the fair value is $169 400 with estimated costs to sell of $12 100, and the value in use is $172 240. The impairment consequences are as follows: a) the asset is impaired in terms of IAS 36 impairement of assets but is not impaired in terms of IFRS 5 non current assets held for sale and discontinued operations. b) the asset is impaired in terms of both IAS 36 impairment of assets and IFRS 5 non current assets held for sale and discontinued operations.

Answer 1

Answer:

A) The asset will be impaired as per IAS 36 impairement of assets but not under IFRS 5, as it is not yet held for sale as per the question and also the impairement loss to be recognised as per IAS 36 has been computed below.

Carrying amount: 2,42,000 - 48,400 = 1,93,600 $

Fair value - expenses = 1,69,400 - 12,100 = 1,57,300

Value in use = 1,72,240 $

Calculation of impairement loss:

Carrying amount - recoverable amount(higher of Fair value less costs to sell or value in use)

= 1,93,600 - 1,72,240 = 21,360 $

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