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CIMA Exam CIMAPRA19-F01-1 Topic 5 Question 105 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 105
Topic #: 5
[All CIMAPRA19-F01-1 Questions]

On 31 March 20X1 OP decided to sell a property. On that date this property was correctly classified as held for sale in accordance with IFRS 5 Non-Current Assets Held For Sale And Discontinued Operations.

In the draft financial statements of OP for the year ended 31 October 20X1 this property has been included at its fair value, which was $520,000 lower than its carrying value. This has resulted in a charge to profit or loss, the result of which is that the draft financial statements show a loss of $450,000 for the year to 31 October 20X1. When the management board of OP reviewed the draft financial statements it was unhappy about the loss and decided that the property should be reclassified as a non-current asset and reinstated to its original value, despite the fact that its plans for the property had not changed.

In accordance with the ethical principle of professional competence and due care, which THREE of the following statements explain how this property should be accounted for in the financial statements of OP for the year ended 31 October 20X1?

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Suggested Answer: A

Contribute your Thoughts:

Matthew
3 days ago
But shouldn't the impairment of $520,000 be shown as an expense in the statement of profit or loss? That seems like a significant loss to ignore.
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Lorean
8 days ago
I agree with Ivory. It makes sense to account for it that way to reflect the correct status of the property.
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Ivory
11 days ago
I think the property should be treated as a non-current asset held for sale from 31 March 20X1.
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