NON- CURRENT ASSETS HELD FOR SALE

On April 23, 2019, Tine Company classified a non-current asset held for sale in accordance with IFRS 5,
Non-current Assets Held for Sale and Discontinued Operations. At that time, the asset’s carrying amount
was P64,000, its fair value was estimated at P48,000 and the costs to sell at P3,800. On June 19, 2019, the
asset was sold for net proceeds of P40,000. The company accounts for non-current assets using the cost
model.
1. In accordance with IFRS 5, what amount should be included as an impairment loss in Tine Company’s
statement of comprehensive income for the year ended June 30, 2019?
2. What amount should be reported as loss on disposal for the year ended June 30, 2019?

3. On January 1, 2016, an entity acquired an item of property, plant and equipment at a cost of P100,000.
The asset had an estimated residual value of P10,000 and a useful life of 10 years. The company uses
straight-line method of depreciation, computed to the nearest month. On October 1, 2019, the asset was
reclassified as “held for sale” under the strict criteria of IFRS 5. Its fair value on this date was P50,000 and
the cost to sell was estimated at P2,000. These estimates were considered valid on December 31, 2019. In
January 2020, the asset was sold for P50,000 and disposal costs incurred amounted to P3,000. How much
is the impairment loss reported in profit or loss for the year 2019?

4. On July 16, 2019, Sarawat Company classified a non-current asset as held for sale in accordance with
IFRS 5. At that date, the asset’s carrying amount was P45,000, its fair value was estimated at P33,000 and
the costs to sell at P4,500. On October 20, 2019, the asset was sold for net proceeds of P27,000. If Sarawat
Company accounts for non-current assets using the cost model, what amount should be included as
impairment loss and loss on disposal, respectively for the year ended Dec. 31, 2019?

5. On September 30, 2019, 2gether Company decided to dispose its manufacturing plant located in Batanes.
The plant is carried at a cost of P8,000,000 with accumulated depreciation of P3,200,000 at December 31,
2018. Annual depreciation on the plant since it was acquired was consistently provided at 8% per year
based on cost. The company has not yet recorded depreciation for 2019. The company undertook all the
necessary actions to be able to classify the asset as held for sale. On September 30, 2019, 2gether Company
estimated that it could sell the plant at its fair value of P4,900,000 after incurring estimated selling costs of
P400,000. On December 20, 2019, 2gether Company sold the plant for P4,950,000 and paid disposal costs
of P350,000. How much is the gain on sale of Batanes plant?

6. Thai Company purchased an equipment for P5,000,000 on January 1, 2021. The equipment had a useful
life of 5 years with no residual value. On December 31, 2021, the entity classified the asset as held for sale.
On such date, the fair value less cost of disposal of the equipment was P3,500,000.

On December 31, 2022, the entity believed that the criteria for classification as held for sale can no longer
be met. Accordingly, the entity decided not to sell the asset but to continue to use it. On December 31, 2022,
the fair value less cost of disposal of the equipment was P2,700,000.

What amount of impairment loss should be recognized in 2021?

What amount should be included in profit or loss in 2022 as a result of the reclassification of the
equipment to property, plant and equipment?
What is the depreciation for 2023?

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