MAY – JUNE
2021
FOR ACCADEMIC NEEDS CONTACT 065 160 9781/
, 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
Depreciation – 1 October 2020 [ ∗ (584 000 − 73 600)] (23 002)
76 000
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
FOR ACCADEMIC NEEDS CONTACT 065 160 9781/
2021
FOR ACCADEMIC NEEDS CONTACT 065 160 9781/
, 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
Depreciation – 1 October 2020 [ ∗ (584 000 − 73 600)] (23 002)
76 000
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
FOR ACCADEMIC NEEDS CONTACT 065 160 9781/
