Anikan Limited has approved a formal plan to sell its head office tower to an outside party. A detailed plan has been approved by the board of directors. The building is on the books at $50 million (net book value). The estimated selling price is S49 million. The company will continue to use the building until the new head office is complete.
Construction has not yet started on the new building, but the company has begun to look for a buyer.
Instructions
(a) Discuss the financial reporting issues as described for the situation above.
(b) Assume it is now two years later and construction of the new building is now complete. The company has moved into the new building. Discuss the financial reporting issues under ASPE and IFRS. What would be the presentation on the income statement and balance sheet? The book value is now $45 million and the fair value is $42 million.