Question
The ice cream factory located in Thailand has been incurring losses for the past 3 years. Management is contemplating the option of either restructuring the
The ice cream factory located in Thailand has been incurring losses for the past 3 years.
Management is contemplating the option of either restructuring the plant or selling it to an
external party. Management believes that losses will continue for another 2 years at about $30m per year before the business operation could turnaround. At year end, neither the
restructuring plan nor the plan to sell was finalised. The carrying amount of the net assets of
the plant at year end was $400m. Based on its current condition, the recoverable amount of the
plant was estimated at $350m.
Can you explain the accounting treatment that shall be accorded to the above case, shall we record provision liabilities?
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