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

Context

Groupe Valérian (fictitious entity, water and beverages) prepares its consolidated IFRS financial statements at 31 December 20X6. The board has committed to a plan to dispose of its Water division, which includes goodwill, tangible and intangible assets, an investment property at fair value, receivables and payables. A filling line Y, classified as held for sale last year, is withdrawn from the plan. You prepare the file: classification, measurement, allocation of the loss, ceasing the classification of Y, discontinued operation, the 20X7 reversal and presentation. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Measurement file

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

• Add up the costs to sell.
• Compute fair value less costs to sell.
• Determine the amount measured for the group (lower of the two bases).
• Compute the annual depreciation of line Y.
• Compute the adjusted carrying amount of Y.
• Compute the amount measured for Y on ceasing the classification.
• Record the 20X6 transactions.

• MinutesMinutes of the boardOpen
• ScheduleCarrying amounts of the divisionOpen
• ExtractExpert's reportsOpen
• ScheduleIncome statement of the divisionOpen
• ScheduleRecord of filling line YOpen
• MemoLetter from the potential buyerOpen
• MemoTraining budgetOpen