Scribd
Upload
26 views

PFRS5 Exercises

The document discusses accounting for assets held for sale and discontinued operations under PFRS5. It provides two examples: 1. For a disposal group with a carrying amount of PHP37 million, the amount presented as held for sale is PHP25 million, which is the fair value less costs to sell as it is lower than the carrying amount. 2. For a plant asset held for sale, the amount presented at December 31, 2022 is PHP305,000, which is the fair value less costs to sell as it is lower than the value in use calculated using undiscounted future cash flows discounted at 8%.

Uploaded by

Joshua Torilla II
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
26 views

PFRS5 Exercises

The document discusses accounting for assets held for sale and discontinued operations under PFRS5. It provides two examples: 1. For a disposal group with a carrying amount of PHP37 million, the amount presented as held for sale is PHP25 million, which is the fair value less costs to sell as it is lower than the carrying amount. 2. For a plant asset held for sale, the amount presented at December 31, 2022 is PHP305,000, which is the fair value less costs to sell as it is lower than the value in use calculated using undiscounted future cash flows discounted at 8%.

Uploaded by

Joshua Torilla II
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 1

PFRS5 - NCA-HELD-FOR-SALE and DISCONTINUED OPERATIONS

1. Excel Corp. plans to dispose of a group of net assets that form a disposal group. The net assets include the
following:
Carrying amount
Goodwill 6,000,000
Property, plant, and equipment 18,000,000
Inventory 10,000,000
Financial assets at fair value 7,000,000
Financial liabilities (4,000,000)
37,000,000

Under applicable PFRSs, property, plant, and equipment would be stated at P16 million and inventory at P9
million. The fair value less cost to sell of the disposal group is P25 million. Assuming that the disposal group
qualifies as held for sale, what is the amount to be presented in the statement of financial position as assets
classified as held for sale?

2. On Dec. 1, 2021, Joy Corporation decided to dispose of an item of plant that is carried in its records at a cost
of P450,000, with accumulated depreciation of P90,000. Depreciation on the plant since it was originally
acquired has been charged at P5,000 per month. The company undertook all the necessary actions to be
able to classify the asset as held for sale. It is estimated that it could sell the plant for its fair value, P350,000,
incurring P10,000 selling costs in the process. On Dec. 31, 2021, the plant had not been sold but, due to a
shortage of this type of plant, there had been an increase in the fair value to P360,000 while expected costs
to sell remain at P10,000.

Joy Corporation had not sold the plant as of Dec. 31, 2022 and the management expected that it will
generate undiscounted net cash inflows of P65,000 per year on its remaining life. On the same date, the fair
value less costs to sell of the plant is P305,000. The appropriate discount rate is 8%.

What amount should the plant be carried in Joy's statement of financial position at Dec. 31, 2022?

“Gravitation is not responsible for people falling in love” – Albert Einstein

/adl

You might also like