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    Module 3 - Assessment Activities

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    aj dump
    This document provides assessment activities that include discussion questions and problems relating to accounting for non-current assets held for sale. The discussion questions ask about the conditions for classifying a non-current asset as held for sale, how such assets are measured and presented, and how to account for changes in classification. The problems provide scenarios about equipment and a plant that meet the criteria to be classified as assets held for sale, and require journal entries to properly account for the transactions.

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    Module 3 - Assessment Activities

    Uploaded by

    aj dump
    52 views2 pages
    This document provides assessment activities that include discussion questions and problems relating to accounting for non-current assets held for sale. The discussion questions ask about the conditions for classifying a non-current asset as held for sale, how such assets are measured and presented, and how to account for changes in classification. The problems provide scenarios about equipment and a plant that meet the criteria to be classified as assets held for sale, and require journal entries to properly account for the transactions.

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    This document provides assessment activities that include discussion questions and problems relating to accounting for non-current assets held for sale. The discussion questions ask about the conditions for classifying a non-current asset as held for sale, how such assets are measured and presented, and how to account for changes in classification. The problems provide scenarios about equipment and a plant that meet the criteria to be classified as assets held for sale, and require journal entries to properly account for the transactions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    52 views2 pages

    Module 3 - Assessment Activities

    Uploaded by

    aj dump
    This document provides assessment activities that include discussion questions and problems relating to accounting for non-current assets held for sale. The discussion questions ask about the conditions for classifying a non-current asset as held for sale, how such assets are measured and presented, and how to account for changes in classification. The problems provide scenarios about equipment and a plant that meet the criteria to be classified as assets held for sale, and require journal entries to properly account for the transactions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    ASSESSMENT ACTIVITIES

    DISCUSSION QUESTIONS
    In a separate sheet of paper, kindly copy the questions, then answer.
    1. What are the conditions required for a non-current asset to be classified as held for
    sale?
    2. How is a non-current asset or a disposal group held for sale measured in the
    financial statements?
    3. When is the sale of a non-current asset considered to be highly probable?
    4. How are non-current assets held for sale shown on the face of the statement of
    financial position?
    5. How to account for changes in classification of non-current asset to non-current
    asset held for sale?

    PROBLEMS
    Show your complete solution, in good accounting form, on a separate sheet of paper.

    Problem 1
    A piece of equipment with a carrying value of P 42,000 on January 1, 2020 meets the
    criteria for classification as Held for Sale on March 31, 2020. The equipment is being
    depreciated over 5 years on a straight-line basis and has a remaining life of 3 years as of
    January 1, 2020. The following additional information is available:

    Fair value less cost to sell on March 31, 2020

    P 36,000
    Fair value less cost to sell on December 31, 2020 40,000
    Required:
    1. Give the entries on March 31, 2020 and December 31, 2020 as a result of
    foregoing.
    2. Assume instead that the fair value less cost to sell on December 31, 2020
    decreased to P35,000. Give the entry on December 31, 2015.

    Problem 2
    On January 1, 2020, IT’S SHOWTIME Corporation decided to dispose of an item of
    plant that is carried in its records at a cost of P= 900,000, with accumulated
    depreciation of P= 160,000. Depreciation on the plant since it was originally acquired
    has been charged of P= 10,000 per month. The plant will continue to be operated until
    it is sold, at which time the operations of the plant will be outsourced. The company
    undertook all the necessary actions to be able to classify the asset as held for sale. It
    is estimated that it could sell the plant for its fair value, P= 720,000, incurring P=
    20,000 selling costs in the process. The plant has been depreciated at an amount of
    P= 10,000 per month.

    On March 31, 2020, the plant had not been sold but, due to shortage of this type of
    plant, there had been an increase in the fair value to P= 770,000. On June 30, 2020,
    IT’S SHOWTIME sold the plant for P= 785,000 incurring P= 25,000 selling costs.

    The depreciation expense to be recognized in 2020 is .

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