B) Buyer Ltd owns an item of equipment which was purchased on 1 July 2012 at a cost of GH¢450,000. It is being depreciated on straight line basis over its useful economic life of 15 years. At 1 April 2017, the equipment was no longer needed by the entity. It was decided that the asset would be sold and a buyer was being sought. The asset is advertised for sale at a price of GH¢275,000 which was a reasonable reflection of its fair value. It is anticipated that transportation cost of GH¢30,000 will be incurred to deliver the item to the buyer. The sale is expected to occur before 31 March 2018. Require: Explain how to account for the above transaction in accordance with IFRS 5 Non-current asset held for sale and discontinued operation, for the year ended 30th June 2017.
B) Buyer Ltd owns an item of equipment which was purchased on 1 July 2012 at a cost of GH¢450,000. It is being depreciated on straight line basis over its useful economic life of 15 years. At 1 April 2017, the equipment was no longer needed by the entity. It was decided that the asset would be sold and a buyer was being sought. The asset is advertised for sale at a price of GH¢275,000 which was a reasonable reflection of its fair value. It is anticipated that transportation cost of GH¢30,000 will be incurred to deliver the item to the buyer. The sale is expected to occur before 31 March 2018. Require: Explain how to account for the above transaction in accordance with IFRS 5 Non-current asset held for sale and discontinued operation, for the year ended 30th June 2017.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
B) Buyer Ltd owns an item of equipment which was purchased on 1 July 2012 at a cost of GH¢450,000. It is being depreciated on straight line basis over its useful economic life of 15 years. At 1 April 2017, the equipment was no longer needed by the entity. It was decided that the asset would be sold and a buyer was being sought. The asset is advertised for sale at a price of GH¢275,000 which was a reasonable reflection of its fair value. It is anticipated that transportation cost of GH¢30,000 will be incurred to deliver the item to the buyer. The sale is expected to occur before 31 March 2018.
Require:
Explain how to account for the above transaction in accordance with IFRS 5 Non-current asset held for sale and discontinued operation, for the year ended 30th June 2017.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education