IAS 16 · Workpapers (Step 4 of 5)
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Derecognition
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- Published
Objective of the workpaper
Determine the derecognition date (transfer of control), stop depreciation at that date, calculate the carrying amount derecognised and the gain or loss (net disposal proceeds less carrying amount), then record the depreciation for the period and the derecognition.
8 sections · 23 blocks · 6 calculations · 2 entries
- IAS 16 §55
- IAS 16 §67
- IAS 16 §68
- IAS 16 §69
- IAS 16 §71
Work this workpaper as a mission
Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.
1 instance from the cases: the calculations and entries below are run by the calculation engine.
- File and entity
- Flood, compensation and disposal of a production line
- Case tasks documented here
- On what date is the line derecognised: board decision, contract signature or transfer of control?
- Calculate the revised annual charge after the impairment and the 20X3 charge up to derecognition.
- Calculate the carrying amount at the derecognition date, the net proceeds and the gain or loss on disposal.
- What journal entries do you record in 20X3 up to the derecognition of the line?
Inputs
InputsAsset disposed of or retired
TextRequired
Date control passes to the buyer
DateRequired
20X3-03-31
Gross carrying amount of the asset
NumberRequired
1,200,000
Accumulated depreciation at the beginning of the period
NumberRequired
360,000
Accumulated impairment losses
Number
560,000
Annual charge in force
NumberRequired
40,000
Months of depreciation up to derecognition
NumberRequired
3 months
Disposal proceeds
NumberRequired
290,000
Costs of disposal (dismantling, transport)
Number
5,000
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Gain or loss on derecognition
CalculationsIAS 16 §55IAS 16 §68IAS 16 §71
Depreciation up to the derecognition date
CalculationRequired
10,000
Annual charge in force ; Months of depreciation up to derecognition
Accumulated depreciation at the derecognition date
CalculationRequired
370,000
Accumulated depreciation at the beginning of the period ; Depreciation up to the derecognition date
Carrying amount at the derecognition date
CalculationRequired
270,000
Gross carrying amount of the asset ; − Accumulated depreciation at the derecognition date ; − Accumulated impairment losses
Net disposal proceeds
CalculationRequired
285,000
Disposal proceeds ; − Costs of disposal (dismantling, transport)
Gain on derecognition (not classified as revenue)
CalculationRequired
15,000
Net disposal proceeds ; − Carrying amount at the derecognition date
Loss on derecognition
CalculationRequired
0
Net disposal proceeds ; − Carrying amount at the derecognition date
Journal entries
EntriesDepreciation up to the derecognition date
EntryRequired
Account Debit Credit Depreciation charge 10,000 Accumulated depreciation 10,000 Derecognition of the asset
EntryRequired
Account Debit Credit Net proceeds received 285,000 Accumulated depreciation 370,000 Accumulated impairment 560,000 Gross carrying amount derecognised 1,200,000 Gain on derecognition 15,000
Date of derecognition
JudgmentIAS 16 §55IAS 16 §67IAS 16 §69
Derecognition date
JudgmentRequired
Control transferred at that date / Control not yet transferred
Rationale: facts relied on, analysis, alternative rejected
TextRequired
Conclusion
ConclusionConclusion on the derecognition date and the gain or loss
ConclusionRequired
Impact on the financial statements
FS impactImpact by heading, derived from the entries above (the Notes row points to the disclosures)
TableRequired
Normative references
ReferencesParagraphs cited in this workpaper (verification status shown from the registry)
References
Checks and financial statement impact
- The depreciation entry balancesPass
- The derecognition entry balancesPass
- Assets
- 5,000
- Liabilities
- 0
- Profit or loss
- 5,000
- OCI
- 0
- Equity
- 5,000
Inputs
InputsAsset disposed of or retired
TextRequired
Date control passes to the buyer
DateRequired
Gross carrying amount of the asset
NumberRequired
Accumulated depreciation at the beginning of the period
NumberRequired
Accumulated impairment losses
Number
Annual charge in force
NumberRequired
Months of depreciation up to derecognition
NumberRequired
Disposal proceeds
NumberRequired
Costs of disposal (dismantling, transport)
Number
Supporting evidence
EvidenceEvidence obtained and referenced (category, document reference)
EvidenceRequired
Gain or loss on derecognition
CalculationsIAS 16 §55IAS 16 §68IAS 16 §71
Depreciation up to the derecognition date
CalculationRequired
Annual charge in force ; Months of depreciation up to derecognition
Accumulated depreciation at the derecognition date
CalculationRequired
Accumulated depreciation at the beginning of the period ; Depreciation up to the derecognition date
Carrying amount at the derecognition date
CalculationRequired
Gross carrying amount of the asset ; − Accumulated depreciation at the derecognition date ; − Accumulated impairment losses
Net disposal proceeds
CalculationRequired
Disposal proceeds ; − Costs of disposal (dismantling, transport)
Gain on derecognition (not classified as revenue)
CalculationRequired
Net disposal proceeds ; − Carrying amount at the derecognition date
Loss on derecognition
CalculationRequired
Net disposal proceeds ; − Carrying amount at the derecognition date
Journal entries
EntriesDepreciation up to the derecognition date
EntryRequired
Debit Depreciation charge ← Depreciation up to the derecognition date ; Credit Accumulated depreciation ← Depreciation up to the derecognition date
Derecognition of the asset
EntryRequired
Debit Net proceeds received ← Net disposal proceeds ; Debit Accumulated depreciation ← Accumulated depreciation at the derecognition date ; Debit Accumulated impairment ← Accumulated impairment losses ; Debit Loss on derecognition ← Loss on derecognition ; Credit Gross carrying amount derecognised ← Gross carrying amount of the asset ; Credit Gain on derecognition ← Gain on derecognition (not classified as revenue)
Date of derecognition
JudgmentIAS 16 §55IAS 16 §67IAS 16 §69
Derecognition date
JudgmentRequired
Control transferred at that date / Control not yet transferred
Rationale: facts relied on, analysis, alternative rejected
TextRequired
Conclusion
ConclusionConclusion on the derecognition date and the gain or loss
ConclusionRequired
Impact on the financial statements
FS impactImpact by heading, derived from the entries above (the Notes row points to the disclosures)
TableRequired
Normative references
ReferencesParagraphs cited in this workpaper (verification status shown from the registry)
References