Question
Case Study 22.2 The Board of Rockby approved the relocation of the head ofce site on 1 March 2003. The head ofce land and buildings
Case Study 22.2 The Board of Rockby approved the relocation of the head ofce site on 1 March 2003. The head ofce land and buildings were renovated and upgraded in the year to 31 March 2003 with a view to selling the site. During the improvements, subsidence was found in the foundations of the main building. The work to correct the subsidence and the renovations were completed on 1 June 2003. As at 31 March 2003 the renovations had cost $2.3 million and the cost of correcting the subsidence was $1 million. The carrying value of the head ofce land and buildings was $5 million at 31 March 2003 before accounting for the renovation. Rockby moved its head ofce to the new site in June 2003, and at the same time, the old head ofce property was offered for sale at a price of $10 million. However, the market for commercial property had deteriorated signicantly, and as at 31 March 2004 a buyer for the property had not been found. At that time the company did not wish to reduce the price and hoped that market conditions would improve. On 20 April 2004 a bid of $8.3 million was received for the property, and eventually it was sold (net of costs) for $7.5 million on 1 June 2004. The carrying value of the head ofce land and buildings was $7 million at 31 March 2004. Non-current assets are shown in the nancial statements at historical cost. Discuss whether the above non-current assets would be classed as held for sale if IFRS 5 had been applied to the head ofce land and buildings in the group nancial statements at 31 March 2003 and 31 March 2004.
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