Q.5 (a) An asset is considered to be impaired if its carrying value is more than its recaverable amourt. In order to assess whether an asset has impaired, IAS 36 describes a number of indications based on internal and external saurces of information, What are these indications? o7 (b) Gul Mohammad Textile Limited has an item of plant with the following detal Carrying value Rs. 25 milion Tax base Rs. 16 million A tax rate of 25% would apply in case of sale of the asset and a tax rate of 35% would apply to other income. Required: ‘As per IAS 12, what amount of deferred tax liability will be recognized ifthe entity: 03 (i) expects to sell the asset without further use? ) retains the asset to recover its carrying amount through use? (c) Gaba Limited started construction of an asset in 2014, which satisfies the definition of a ‘qualifying asset’ under IAS 23. For the construction of the asset, funds were arranged from following sources on January 1, 2014: ‘© Issuance of 12% loan notes for Rs, 90 milion © Bank loan @ 1% for Rs. 110 million In addition, issue costs of 1% of nominal value were incurred for 12% loan notes. All necessary activties relating to the construction of the asset did not start until February 1, 2014. The directors of the company estimated that all the funds will not be required immediately. Hence, keeping in view the requirements of funds in future, the idle money was invested @ 8% per annum in the following manner Thvestment period Thvested amount From 01-Jan-2014 10 30-Apr-2014 Rs. 120 milion From 01-May-2014 to 31-Aug-2014 ___Rs._86 million During October 2014, the construction activities remained suspended due to some unavoidable reasons. The asset was ready for use on November 30, 2014, after completion. However, the use of the asset commenced on January 1, 2015. Company's year ends on December 31 Required: For the year ended to December 31, 2014 (i) What amount of borrowing cost (net of investment income) will be captalized? 05 )). What amount of borrowing cost and investment income will be taken to prafit or loss? 03 (iii) At what amount will the non-current asset be shown in the statement of financial position? 02 THE END PaSpring 2015, 404