Held-for-sale classification criteria file: Line M2

Context

Cobalt Packaging SA (fictitious entity) had classified its machine M1 as held for sale at its carrying amount at 31 December 20X5. At 31 December 20X6, no acceptable offer having come, the board gives up the sale. The entity also examines two other assets: a line M2 stopped temporarily and a workshop M3 intended to be abandoned.

Assignment

Classification criteria file

Purpose of the workpaper

For each asset or group (one instance per asset), describe its condition and current use, gather the evidence of the plan (decision, marketing effort, offers, timetable), enter the asking price and the reference fair value, then justify each judgement: sale highly probable, availability for immediate sale, one-year period and any delay beyond the entity's control, sale or abandonment, plan maintained or changed. The standard sets no threshold: a 'reasonable' price and a 'highly probable' sale are matters of judgement documented by the facts. Then prepare the reclassification entry.

Questions of the file covered by this workpaper

• How should M1, M2 and M3 be qualified: ceasing the classification, temporary stop or abandonment?
• Does the change of plan justify ceasing the classification of M1? Justify.
• Record the return to use, the adjustment and any loss.

• ContractRecord of machine M1Open
• MinutesBoard extractOpen
• MemoNote on M2 and M3Open
• InvoiceInsurance invoiceOpen