Page 432 - SBR Integrated Workbook STUDENT S18-J19
P. 432
Chapter 25
Chapter 11
Example 1
Events after the reporting period
Active marketing commenced after the reporting date. As at the period end,
the building was not being actively marketed and so should not have been
classified as held for sale.
If deemed material, Ivy should disclose in a note to the financial statements
that the conditions required to classify the building as held for sale were met
after the reporting date.
Example 2
New legislation
There is no obligation to replace the machine. This is because the expenditure
is avoidable – Ivy could close the business or change its business operations.
No provision is therefore required for the cost of the new machines.
There is, however, a legal obligation to pay any fine incurred as a result of
Ivy’s past non-compliance. Assuming that it can be measured reliably, a
provision should be recognised for the estimated cost of the fine that Ivy will
have to pay.
The introduction of the new law suggests that Ivy will get limited benefits from
its old machines. This is an indicator of impairment and an impairment review
should be performed. The carrying amount of the machines should be
compared to their recoverable amount and any excess written off to profit or
loss.
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