Professional Documents
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P5,000,000 on January 1, 2017. The equipment Cash
had a useful life of 5 years with no residual value
On December 31, 2017, the entity classified the Depreciation Expense 1,000,000.00
asset as held for sale. On such date , the fair Accum Dep'n
value less COD of the equipment was P3,500,000.
Equipment HFS 3,500,000.00
On December 31, 2018, the entity believed that CA 3,000,000.00
the criteria for classification as HFS can no longer RA 2,700,000.00
be met.
1,000,000.00
2,700,000.00
3,500,000.00
On December 31, 2019, ABC Company classified Building HFS 400,000.00
its building with a historical cost of P1,000,000 Accum Dep'n 600,000.00
and accumulated depreciation of P600,000 as Building
held for sale. All of the criteria under PFRS 5 are
complied with. On that date, the building has a Impairment Loss 70,000.00
fair value of P350,000 and cost to sell of P20,000 Building HFS
The building was not sold in 2020. However, the Impairment Loss 20,000.00
exception to the one year requirement was met. Building HFS
On December 31, 2020, the fair value less cost
to sell of building is P310,000.00.
The building was not sold in 2021. However , the Building HFS 90,000.00
exception to the 1 year requirement was still met. Gain on reversal
On December 31, 2021, the fair value less cost to
sellof building increased to P420,000.00.
1,000,000.00
70,000.00
20,000.00
90,000.00
On January 1, 2019, an entity acquired an equipment 1-Jan-19 Equipment
at a cost of P5,000,000 to be used in the ordinary Cash
course of business. The equipment has en estimated
useful life of 10 years and a residual value of P500,000. 31-Dec-19 Depreciation Expense
Accum Dep'n
On January 1, 2022, the equipment was classified as
held for sale. On such date, the fair value less cost of 31-Dec-20 Depreciation Expense
disposal was estimated at P1,900,000. On June 30, Accum Dep'n
2022, the equipment was sold for P1,500,000.00.
31-Dec-21 Depreciation Expense
Accum Dep'n
CA 3,650,000.00
FV-CTS 1,900,000.00
Impairment Loss 1,750,000.00
30-Jun-22 Cash
Loss on reclassification
Equipment HFS
5,000,000.00
5,000,000.00
450,000.00
450,000.00
450,000.00
450,000.00
450,000.00
450,000.00
1,900,000.00
1,750,000.00
1,350,000.00
5,000,000.00
1,500,000.00
400,000.00
1,900,000.00
On January 1, 2019, an entity acquired an equipment Equipment 4,000,000.00
at a cost of P4,000,000 to be used in the ordinary Cash
course of business. The equipment has en estimated
useful life of 5 years and has no residual value. Dep Exp 800,000.00
Accum Dep'n
On December 31, 2020, the equipment was classified
as held for sale. On such date, the fair value less cost Dep Exp 800,000.00
of disposal was P3,000,000. On July 1, 2021, the Accum Dep'n
equipment was sold for P2,900,000.
CA 2,400,000.00
FV-CTS 3,000,000.00
Equipment
1-Jan-19 Equipment 4,000,000.00
4,000,000.00 Cash
4,000,000.00 CA 2,400,000.00
FV-CTS 3,000,000.00
4,000,000.00
800,000.00
800,000.00
4,000,000.00
500,000.00
2,400,000.00
On January 1, 2017, the entity acquired land 1-Jan-17 Land
at a cost of P2,500,000. The land is measured Cash
at fair value in accordance with the revaluation
model. On December 31, 2017, the fair value 31-Dec-17 Land
of the land was P3,000,000. On June 30, 2018, RS
the land was classified as held for sale. On such
date , the fair value was estimated at P3,500,000 30-Jun-18 Land
and the cost of disposal at P100,000. On December RS
31, 2018, the land was sold for P3,350,000.
30-Jun-18 Land HFS
Impairment Loss
Land
31-Dec-18 Cash
Loss on sale
Land HFS
RS
RE
2,500,000.00
2,500,000.00
500,000.00
500,000.00
500,000.00
500,000.00
3,400,000.00
100,000.00
3,500,000.00
3,350,000.00
50,000.00
3,400,000.00
1,000,000.00
1,000,000.00
Siasi Company is a diversified entity with nation- Revenues 50,000,000.00
wide interests in commercial real estate develop- Expenses 37,000,000.00
ment, banking, mining and food distribution. On Termination Cost 4,000,000.00
October 1, 2019, the board of directors voted to Impairment Loss -
approve the disposal of food distribution division. 9,000,000.00
The sale is expected to occur in August, 2020. ITE (30%) 2,700,000.00
IFDO 6,300,000.00
The food distribution division had the following
revenue and expenses in 2019: January 1 to CA 56,000,000.00
September 30, revenue of P35,000,000 and FV-COD 60,000,000.00
expenses of P27,000,000; October 1 to December Unrecognized Gain 4,000,000.00
31, revenue of P15,000,000 and expenses of
P10,000,000.
8,000,000.00
6,500,000.00
1,500,000.00
Marcus Company plans to dispose a group of its CA
assets HFS. The assets form a disposal group, and Remeasured CA
are measured as follows: Loss
Carrying Amount
Before Remeasured
Classification as Amount Before
HFS Class. As HFS
Goodwill 3,000,000.00 3,000,000.00 Remeasured CA
PPE (RA) 9,200,000.00 8,000,000.00 FV-CTS
PPE (HA) 11,400,000.00 11,400,000.00 Impairment Loss
Inventory 4,800,000.00 4,400,000.00 for Goodwill
Investment AFS 3,600,000.00 3,000,000.00 for Other Assets
Total 32,000,000.00 29,800,000.00
Requirements:
1. Loss loss to be recognized before classification as HFS
Ans: 2,200,000.00
2. Loss when disposal group was initially classified as HFS
Ans: 3,800,000.00
3. Loss before classification is charged against the GW
Ans: 3,000,000.00
4. Loss before classification is charged to PPE
Ans: 800,000.00
32,000,000.00
29,800,000.00
2,200,000.00
29,800,000.00
26,000,000.00
3,800,000.00
(3,000,000.00)
800,000.00
Melvin Company plans to dispose of a group of net assets CA
that form part a disposal group. The net assets at
December 31, 2019 are:
Remeasured CA
Goodwill 6,000,000.00 FV-CTS
PPE 18,000,000.00 Impairment Loss
Inventory 10,000,000.00 for Goodwill
Financial Assets 7,000,000.00 for Other Assets
Financial Liabilities (4,000,000.00)
Total 37,000,000.00
Requirements:
1. Impairment Loss allocated to PPE
Ans: 3,000,000.00
2. Impairment Loss allocated to Goodwill
Ans: 6,000,000.00
3. Impairment Loss allocated to Inventory
Ans: -
4. CA of Disposal Group after Classification
Ans: 25,000,000.00
5. Amount of liability directly associated withh DG
Ans: 4,000,000.00
37,000,000.00
(2,000,000.00)
(1,000,000.00)
34,000,000.00
25,000,000.00
9,000,000.00
6,000,000.00
3,000,000.00
TRANSPO SERVICE
VELMAR BACHELO
Buses License
TELECOMMUNICATIONS
PLDT GLOBE
Office 1 Office 2
Branch - Disposal Group
SERVICE
BACHELOR OCHO
UNICATIONS
GLOBE SPSPS
Office 1 Office 2 1 Campus
FAST FOOD CHAIN
OCHO JOLLIBEE
SCHOOL
SPSPS USC
1 Campus Campus 1 Campus 2
Classification Asset(s) Being Sold
NCA-HFS A single noncurrent asset Income from Continuing Operations
Disposal Group A group of assets Income from Continuing Operations
Discontinued Operation A component of an entity Income from Discontinued Operations
perations
perations
Operations
Noncurrent Assets classified as HFS
Liabilities directly associated with NCA -HFS