Question
Jupiters directors made the following decisions during the year ended 31 August 2020: it disposed of all of its outlets in Switzerland it rebranded all
Jupiters directors made the following decisions during the year ended 31 August 2020:
it disposed of all of its outlets in Switzerland
it rebranded all of its outlets in Malaysia to target the tourism market. The previous target market in Malaysia had been aimed at business clients.
At a board meeting on 1 January 20X3, the directors decided sell an item of plant, which had a carrying value of $4 million at 1 September 2019 and a remaining life of 20 years. The plant is expected to sell for $3.9 million within 12 months.
A decision was also made to close down a regional office, which was communicated to the employees before the yearend. 50 employees would be retrained and kept at a cost of $100,000, the others took redundancy and will be paid $300,000.
$75,000 is to be spent on marketing materials directing customers of the existing factory to other production facilities operated by the company.
Required (6 marks):
(i). Discuss whether the criteria outlined in IFRS 5 were satisfied with respect to the recognition of an asset as held for sale.
(ii). Discuss whether the change in operations in Switzerland and Malaysia represent a discontinued operation in accordance with IFRS 5 NonCurrent Assets Held for Sale and Discontinued Operations.
(iii). At what value should the plant be held at 31 August 2020 in accordance with IFRS 5?
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