TUTORIAL FOR MFRS 5 NON CURRENT ASSETS HELD FOR SALE and discounted operations

QUESTION 1

Grease Bhd leased out tangible non- current assets as operating leases. At 1 January x5, the carrying maount of such assets was RM 20 million. These assets were recently leased out on operating leases and have now expired. The company is undecided as to whether to sell or lease it to customers under finance leases. The fair value less selling costs of the assets is RM18 million and the value in used is estimated at RM24 million.

Required:

Discuss the accounting treatment of these assets for the year ended 31 December x5.

QUESTION 2

Zuko had a plant with a carrying amount of RM5 million at 31 March x6 which ceased to be used because of a downturn in the economy. The company had decided at 31 March x6, which was its financial year end, to maintain the plant in working condition in case of a change in economic conditions. Zuko subsequently sold the plant by auction on 14 May x6 for RM 3 million net of costs.

Required:

Discuss the accounting treatment of the plant.