FR IFRS 5 & IAS 12 New

Jul 17, 2026

Uploaded by Levi

Questions and solution-oriented scenarios covering IFRS 5 requirements for discontinued operations and non-current assets held for sale, including disposal groups, measurement at fair value less costs to sell, presentation in the statement of profit or loss, and treatment when classification as held for sale occurs before year-end. Additional cases address building disposals with ongoing use, abandonment of plants and closure of a major segment, and classification and presentation of assets intended for sale. Separate items also involve IAS 12 income taxes, requiring correct accounting for current tax liabilities and subsequent settlement.

LanguageEnglish

CategoryExam

FormatPDF

Pages4

Reading Time10 min

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1. An entity has agreed in a directors’ meeting to sell a building, and has tentatively started looking for a buyer for the building. The price of the building has been fixed at $3m and a surveyor has valued the building based on market prices at $2.6m. The entity will continue to use the building until another building has been found with equivalent facilities, and in a suitable location for the office staff, who will not be relocated until the new building has been found. Additionally, the entity is planning to sell part of its business and has actively marketed the business at a fair price but, before the business can be sold, government approval is required and any sale requires government approval. This means that the sale time is difficult to determine and it may take longer than one year to sell the disposal group. Required: How should the entity’s building and part of its business be accounted for in the financial statements? 2. An entity has stopped using certain plants because of a downturn in orders. It is maintaining the plant as the entity hopes that orders will pick up in future. Additionally, it intends to shut down one-half of its manufacturing base. The units to be closed constitute a major segment of its business and will close in the current financial year. Required: Should the entity’s plant be abandoned and how should part of its manufacturing base be accounted for in the financial statements? 3. The following is the separate major line of the business (disposal group) and held for sale on 31 Dec 20X0. | Carrying value at 31 Dec 20X0 | $m | | --- | --- | | Goodwill | 16 | | Property, plant and equipment | 28 | | Inventory | 20 | | Financial assets (profit of $4m recognised in equity) | 17 | | Financial liabilities | (14) | | | 67 | Assume that the disposal group qualifies as held-for-sale. As at 31 Dec 20X0 Property, plant, equipment, and inventory are estimated to have fair value less costs to sell of $26m and $18m respectively. The fair value less costs to sell of the disposal group is $47m. Required: Show how the disposal group would be accounted for in the financial statements for the year ended 31 December 20X0. 4. On 1 January 2012 Casino bought an item of plant for $200,000 . It has an expected useful life of 10 years but will realise nothing on final disposal. On 31 December 2014, after three years of using the asset, it was decided to sell the plant. A plan was put in place and instructions given to locate a buyer. The plant is in great demand so Casino is confident that the machine will be sold promptly. Its current market value is $130,000 . Asthe item of plant is of a considerable size dismantling costs to make it available for sale will be incurred of $1,000 . Required: Show how the asset should be presented in the Statement of Financial Position as at 31 December 2014. 5. York bought an asset at a cost of $120,000 on 1 January 20X1 and depreciated it straight line over 10 years. Th

Jul 17, 2026

Uploaded by Levi