Noddy has a property included in its statement of financial position at a carrying amount of $2.75m. The property had been revalued during the year. If the property had not been revalued its carrying amount would only have been $1.25m. Following a fire, an impairment review of the property has been undertaken and it is estimated that its recoverable amount is only $1m. How much of the impairment loss should be recognised in other comprehensive income in accordance with IAS 36 Impairment of Assets? A.$1.75m B.$1.50m C.$0 D.$0.25m

AS 36 Impairment of Assets prescribes the procedures that should ensure that assets are included in a statement of financial position at no more than their recoverable amounts. Where an asset is carried at an amount in excess of its recoverable amount, it is said to be impaired and IAS 36 requires an impairment loss to be recognised. Required:(i) Define an impairment loss explaining the relevance of fair value less costs of disposal and value in use, and state how frequently assets should be tested for impairment. (5 marks)(ii) Explain how an impairment loss is accounted for. (4 marks)(b) Wilderness owns and operates an item of plant that cost $640,000 and had accumulated depreciation of $400,000 at 1 October 20X7. It is being depreciated at 12½% on cost. On 1 April 20X8 the plant was damaged when a factory vehicle collided into it. Due to the unavailability of replacement parts, it is not possible to repair the plant, but it still operates, albeit at a reduced capacity. Also it is expected that as a result of the damage the remaining life of the plant from the date of the damage will be only two years. Based on its reduced capacity, the estimated present value of the plant in use is $150,000. The plant has a current disposal value of $20,000 (which will be nil in two years’ time), but Wilderness has been offered a trade-in value of $180,000 against a replacement machine which has a cost of $1 million (there would be no disposal costs for the replaced plant). Wilderness is reluctant to replace the plant as it is worried about the long-term demand for the product produced by the plant. The trade-in value is only available if the plant is replaced. Required:Prepare extracts from the statement of financial position and statement of profit or loss of Wilderness in respect of the plant for the year ended 30 September 20X8. Your answer should explain how you arrived at your figures. (6 marks)

Which of the following statements regarding AASB 136 Impairment of Assets is MOST CORRECT?Group of answer choicesIts objective is to ensure assets are not carried at more than the amount recovered through use or sale of the asset.Impairment losses can never be reversed above the asset’s fair value.It allows financial statement preparers the choice of holding assets at recoverable amount instead of historical cost.Depreciation is calculated for an impaired asset based on its carrying amount as if no impairment loss was recorded.

An entity purchased property for $6 million on 1 July 20X3. The land element of the purchasewas $1 million. The expected life of the building was 50 years and its residual value nil. On30 June 20X5 the property was revalued to $7 million, of which the land element was$1.24 million and the buildings $5.76 million. On 30 June 20X7, the property was sold for$6.8 million.What is the gain on disposal of the property that would be reported in the statement ofprofit or loss for the year to 30 June 20X7?A Gain $40,000B Loss $200,000C Gain $1,000,000D Gain $1,240,000

An entity has revalued its property and has recognized the increase in the revaluation reserve in its financial statements. The carrying value of the property was GHS8 million, and the revalued amount was GHS10 million. Tax base of the property was GHS6 million. In the country, the tax rate applicable to profits is 35% and the tax rate applicable to profits made on the sale of property is 30%. Where will the tax liability be recognized and at what amount?a.In statement of recognized income and expense at GHS1.4 million.b.In equity at GHS1.2 million.c.In the income statement at GHS600,000.d.In retained earnings at GHS700,000.

An entity purchased an asset on 1 January.The entity is committed to expenditure of $10 million in 10 years' time to decommission this asset. The obligation satisfies the recognition criteria in IAS 37.An appropriate discount factor is 8%.