- 15 Marks
CR – Nov 2016 – L3 – SC – Q6 – Events After the Reporting Period (IAS 10)
Assess the treatment of transactions involving a property sale in accordance with IFRS 5 and evaluate the impact of events on reported gains under IAS 10.
Question
straight-line basis at the rate of 7.5%. An impairment loss of N350,000 was recognized at the end of May 31, 2013, financial year when accumulated depreciation was N1 million. Consequently, the property was valued at its estimated value in use. The company planned to move to new premises before the property was classified as held for sale on October 1, 2013. By this time, the fair value less costs to sell was N2.4 million.
Maranathan Plc published interim financial statements on December 1, 2013, by which time the property market had improved, and the fair value less costs to sell was reassessed at N2.52 million. At the year-end, on May 31, 2014, it had improved further, so that the fair value less costs to sell was N2.95 million. The property was disposed of eventually on June 5, 2014, for N3 million.
Required:
a. Assess the above transactions based on the requirements of IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. (5 Marks)
b. Evaluate the impact of the events occurring on the property over time and on the reported gain in accordance with IAS 10, Events After the Reporting Period. (10 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Discontinued Operations, Events After Reporting, Held for Sale, IAS 10, IFRS 5, Non-current Assets
- Level: Level 3
- Topic: Events After the Reporting Period (IAS 10)
- Series: NOV 2016