On 1 June 2016, Milko Ltd acquired a property for N$5 million and annual depreciation of N$500 000 is charged on the straight-line basis with no residual value. At the end of the previous year of 31 May 2018, when accumulated depreciation was N$1 m, a further amount relating to an impairment loss of N$350 000 was recognized, which resulted in the property being valued at its estimated value in use. 

On 1 October 2018 because of a proposed move to new premises, the property was classified as held for sale. at the time of classification as held for sale, the fair value less costs to sale was N$3,4 million. At the date of the published interim financial statements , 1 December 2018, the property market had improved and the fair value less costs to sell was reassessed at N$3.52 million and at the year end on 31 May 2019 it had improved further, so that the fair value less costs to sell was N$3,95 million. The property was sold on 5 June 2019 for N$4 million.

Required:

Discuss how the above item should be dealt with in the financial statements of Miko Ltd.

Answer rating: 100% (QA)

On 1 June 2016 acquired a property for N5 million Annual depreciation straightline basis N500 000 As ... View the full answer