DFS Unit 11 - Profit on disposal

Stan Bown

Hi
Any suggestion with this gratefully received:

Profit on disposal of land and buildings of £110,000

Dr Disposal a/c £110k
Cr Income Statement £110 k

Any idea which heading on the income statement it goes under? I've guessed at Investment Income but it could also be Other Income (although sale of fixed assets is not operations income) or it may even be a net-off in administration expenses.

Thanks
Stan

peugeot

I would disclose it as 'exceptional items' after 'operating profit before exceptional items' as profit on disposal of assets in that magnitude (£110k) would be classed as an exceptional item.

regards
Steve

Stan Bown

Thanks for that. There seems to be a few options, including exceptional, extraordinary and non-recurring items. The model Income Statement I have (from the Osborne book) based on IAS1 uses non-recurring items but I don't know if that is an industry-standard heading. KPMG and Deloitte, to name but two, publish model IAS financial statements but I can't tell by looking at those where disposals of fixed assets go.

I'm sure it will all become clear as I read on through the sylibus.

peugeot

It would all depend on how substantial the profit/loss on disposal actually was. If it was immaterial then it would not need to be shown separately, but if it is material then it needs to be shown on the face of the income statement separately as an 'exceptional item'.

Kind regards
Steve

p.s. please note that 'extraordinary items' are no longer permissible - they are referred to as 'exceptional items'.

Stan Bown

Thanks. This is a subject where answers always lead to more questions.