Held-for-sale measurement file: lower of, loss, reversal, disposal and ceasing the classification

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

Measurement file on ceasing the classification

Purpose of the workpaper

For each asset (one instance per asset), enter the cost, residual value and useful life, the carrying amount immediately before classification (after the last depreciation charge), the fair value and the table of costs to sell. The file computes the last depreciation charge, the total costs to sell, fair value less costs to sell, the amount measured at the lower of the two, the loss and, depending on the situation, the reversal capped at the cumulative loss, the result of the disposal and the measurement on ceasing the classification. Fair value is a datum of the file; financing charges and income tax are not costs to sell. Then prepare the entries. The last charge is the full annual charge: the file assumes classification at the reporting date; for a classification during the year, enter the carrying amount after the charge prorated for the period elapsed. The measurement on ceasing the classification reflects only the missed depreciation; any loss down to the recoverable amount is recognised separately.

Questions of the file covered by this workpaper

• Compute the depreciation not recognised during the classification.
• Compute the adjusted carrying amount before classification.
• Compute the amount measured on ceasing the classification.
• Record the return to use, the adjustment and any loss.

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