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Chapter 25
Example 7
Held for sale
The assets are being marketed at fair value and many buyers have expressed
an interest. This suggests that the sale is highly probable and that it will occur
within one year.
It could be argued that Music’s continuing use of the assets means that
classification as held for sale is inappropriate. However, the use is minimal.
This means that it is unlikely to compromise the ability to sell the asset, and
also that the majority of the assets’ value will still be recovered through a sales
transaction.
Therefore, the video cameras should be classified as held for sale on 1 June
20X6. Depreciation should cease from this date. The assets should be
measured at the lower of carrying amount and fair value less costs to sell.
Chapter 6
Example 1
Agriculture
The animals are biological assets. They are initially recognised at fair value
less costs to sell. At the reporting date, they are revalued to fair value less
costs to sell.
The gain on revaluing the herd at the reporting date is $168 (see calculation
below). This gain is recognised in profit or loss.
$
1 January 20X3 (5 × $200) 1,000
Purchased 212
Fair value gain (bal. fig.) 168
–––––
31 December 20X3 (6 × $230) 1,380
–––––
406
