IFRS 5 -Assets held for sale query
Matt444
Registered Posts: 36 Regular contributor ⭐
Hi everyone,
I sat the CIMA F1 paper and was thrown a bit by question 3 (limited companies).
The question gave a trial balance and talked about a discontinued operation, but only mentioned the trial balance date in the question - 31.03.11 when talking about the discont operation. However, in the additional information it gave a sort of PPE note as at 31.03.10.
I took the assumption that the plans to discontinue were announced at the end of the financial year (at TB date) and so depreciated the disc ops assets. I know you shouldn't depreciate under IFRS 5 but is that not from when the plans to sell are announced?
I can't get it straight in my head
This was the exact wording.....
Question Three
MN operates a number of retail outlets around the country. One retail outlet was closed on 31 March 2011 when trading ceased and the outlet was put up for sale. All income and expenses of the outlet are included in the trial balance. The retail outlet is regarded as a cash generating unit, all its assets are being sold as one unit. At 31 March 2011 the directors are certain that the outlet meets the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations for treatment as non-current assets held for sale.
MN’s trial balance at 31 March 2011 is shown below:
The PPE note was as at the 31.03.10
Can anyone advise me??
I sat the CIMA F1 paper and was thrown a bit by question 3 (limited companies).
The question gave a trial balance and talked about a discontinued operation, but only mentioned the trial balance date in the question - 31.03.11 when talking about the discont operation. However, in the additional information it gave a sort of PPE note as at 31.03.10.
I took the assumption that the plans to discontinue were announced at the end of the financial year (at TB date) and so depreciated the disc ops assets. I know you shouldn't depreciate under IFRS 5 but is that not from when the plans to sell are announced?
I can't get it straight in my head
This was the exact wording.....
Question Three
MN operates a number of retail outlets around the country. One retail outlet was closed on 31 March 2011 when trading ceased and the outlet was put up for sale. All income and expenses of the outlet are included in the trial balance. The retail outlet is regarded as a cash generating unit, all its assets are being sold as one unit. At 31 March 2011 the directors are certain that the outlet meets the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations for treatment as non-current assets held for sale.
MN’s trial balance at 31 March 2011 is shown below:
The PPE note was as at the 31.03.10
Can anyone advise me??
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Comments
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What did the question actually ask you to do?
Been a while since I did this stuff.... but I'll have a go!0 -
You had to prepare an Income Statement, Changes In Equity and Statement of Financial Position as at 31.03.2011. A disclosure was to be made for the held for sale operation.
A PPE note was given that split out the cost and dep'n of the cont and disc operations and showed the NBVs at 31.03.2010.
No mention was given as to an exact date when management decided to stop the operation and put up for sale. I took the assumption the plans were announced on the 31.03.2011 and depreciated the disc assets to this date...
Am I right in thinking that you stop amortising a held for sale under IFRS5 when management announces that it is a discontinued component of the enterprise?
Thanks for your help :-) I just want to get it clear in my mind so that I can better understand the accounting treatment...0 -
I didn't depreciate it anymore, but instead wrote it down to the fair value.0
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Hi Rinske,
I noticed the fair value was lower than the carrying amount and so wrote the assets down to the fair value too.
I think I may have lost a mark or two for putting a depreciation charge through the income statement as I depreciated before writing down to fair value. I also used the minimum disclosure rather than the maximum disclosure for the disc operations in the Income statement as it didn't specify which to use.
Did you take E1 as well? How did you find it?
Thanks0 -
I'm not sure about E1, I took E1 and F1, and found F1 nicer than E1, but I just don't like wordy papers that much and find it hard to say whether or not I passed.
I've found I realised so many silly errors by now on my F1 paper that by now I just hope I passed one and will just wait and see till the 14th of July and possibly just stay away from the CIMA forums until I got the results.
I would recommend to read the 3 weeks to go thread, as there is some more feedback in there from Esme as well!0
