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Required: Disclose all information necessary in relation to the plant and factory buildings in the financial statements for the year ended 31 December 20X3

Required: Disclose all information necessary in relation to the plant and factory buildings in the financial statements for the year ended 31 December 20X3

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 3 An entity owns only the following non-current assets: • Factory buildings; and • Plant. Details of the factory buildings are as follows: • The factory buildings were purchased on 01/01/20X1 at a cost of C600 000, • Depreciation is provided over 10 years to nil residual values on the straight-line basis • The company is transferring part of its business to a new location and thus the existing factory building is to be sold. The sale is expected to take place within 7 months of the end of the reporting period. The factory building is expected to be sold for cash. • Factory buildings were reclassified as 'held for sale' on 30/06/20X3, on which date its fair value less costs of disposal was C445 000 and its value in use was C440 000. Costs to sell and costs of disposal are the same. Fair value less costs to sell remained unchanged at 31/12/20X3. Details of the plant are as follows: • Plant was purchased on 01/01/20X1 at a cost of C100 000; • Depreciation is provided over 10 years to a nil residual value on the straight-line basis; • Plant was reclassified as 'held for sale' on 31/12/20X2 on which date: - its fair value less costs of disposal was C65 000 (costs to sell = costs of disposal); and its value in use was C60 000; • On 30/06/20X3 (six months later), plant ceased to meet all criteria necessary for classification as 'held for sale', on which date its recoverable amount is C85 000 (fair value less costs sell were still C65 000). The plant is no longer classified as 'held for sale' since the intention is now to redeploy it to other factories rather than it being sold together with the factory buildings. Required: Disclose all information necessary in relation to the plant and factory buildings in the financial statements for the year ended 31 December 20X3
Transcribed Image Text:QUESTION 3 An entity owns only the following non-current assets: • Factory buildings; and • Plant. Details of the factory buildings are as follows: • The factory buildings were purchased on 01/01/20X1 at a cost of C600 000, • Depreciation is provided over 10 years to nil residual values on the straight-line basis • The company is transferring part of its business to a new location and thus the existing factory building is to be sold. The sale is expected to take place within 7 months of the end of the reporting period. The factory building is expected to be sold for cash. • Factory buildings were reclassified as 'held for sale' on 30/06/20X3, on which date its fair value less costs of disposal was C445 000 and its value in use was C440 000. Costs to sell and costs of disposal are the same. Fair value less costs to sell remained unchanged at 31/12/20X3. Details of the plant are as follows: • Plant was purchased on 01/01/20X1 at a cost of C100 000; • Depreciation is provided over 10 years to a nil residual value on the straight-line basis; • Plant was reclassified as 'held for sale' on 31/12/20X2 on which date: - its fair value less costs of disposal was C65 000 (costs to sell = costs of disposal); and its value in use was C60 000; • On 30/06/20X3 (six months later), plant ceased to meet all criteria necessary for classification as 'held for sale', on which date its recoverable amount is C85 000 (fair value less costs sell were still C65 000). The plant is no longer classified as 'held for sale' since the intention is now to redeploy it to other factories rather than it being sold together with the factory buildings. Required: Disclose all information necessary in relation to the plant and factory buildings in the financial statements for the year ended 31 December 20X3
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