MAY – JUNE
2021
, SOLUTION 1: NON – CURRENT ASSETS HELD
FOR SALE & DISCONTINUED OPERATIONS;
PROPERTY, PLANT & EQUIPMENT &
IMPAIRMENT OF ASSETS
(a) According to IFRS 5.18 the carrying amount of a non-current asset (or all the assets
and liabilities in a disposal group) shall, immediately before the initial classification
as held for sale, be measured in accordance with the applicable IFRSs.
An entity shall measure a non-current asset (or disposal group) classified as held for
sale at the lower of its carrying amount (at the moment of reclassification) and fair
value less costs to sell – this adjustment is an impairment loss. (IFRS 5.15).
Calculation of carrying amount of all the individual assets in the disposal
group at 1 October 2020
R
Industrial paint machine (𝐶1) 455 838
Inventory – use net realizable value since lower than cost 105 000
Trade receivables 96 000
Total carrying amount 656 838
Calculations
C1. Carrying amount of Industrial paint machine
R
Carrying amount – 31 December 2019 478 840
3 425 (23 002)
Depreciation – 1 October 2020 [76 000 ∗ (584 000 − 73 600)]
Carrying amount – 1 October 2020 455 838
Calculation of fair value less costs to sell of the disposal group at 1 October 2020
Fair value less costs to sell = 𝑹𝟔𝟐𝟎 𝟎𝟎𝟎
Determine the lower of carrying amount and fair value less costs to sell at 1
October 2020
Measure the disposal group held for sale at the fair value less costs to sell of R620 000
as this is lower of the two figures calculated
2021
, SOLUTION 1: NON – CURRENT ASSETS HELD
FOR SALE & DISCONTINUED OPERATIONS;
PROPERTY, PLANT & EQUIPMENT &
IMPAIRMENT OF ASSETS
(a) According to IFRS 5.18 the carrying amount of a non-current asset (or all the assets
and liabilities in a disposal group) shall, immediately before the initial classification
as held for sale, be measured in accordance with the applicable IFRSs.
An entity shall measure a non-current asset (or disposal group) classified as held for
sale at the lower of its carrying amount (at the moment of reclassification) and fair
value less costs to sell – this adjustment is an impairment loss. (IFRS 5.15).
Calculation of carrying amount of all the individual assets in the disposal
group at 1 October 2020
R
Industrial paint machine (𝐶1) 455 838
Inventory – use net realizable value since lower than cost 105 000
Trade receivables 96 000
Total carrying amount 656 838
Calculations
C1. Carrying amount of Industrial paint machine
R
Carrying amount – 31 December 2019 478 840
3 425 (23 002)
Depreciation – 1 October 2020 [76 000 ∗ (584 000 − 73 600)]
Carrying amount – 1 October 2020 455 838
Calculation of fair value less costs to sell of the disposal group at 1 October 2020
Fair value less costs to sell = 𝑹𝟔𝟐𝟎 𝟎𝟎𝟎
Determine the lower of carrying amount and fair value less costs to sell at 1
October 2020
Measure the disposal group held for sale at the fair value less costs to sell of R620 000
as this is lower of the two figures calculated
