The asset and liabilities of the manufacturing plant of JCW Bhd form a disposal group. The criteria for classification are met on 30 April 2012.

As at 1 January 2012, the carrying amounts of the asset and liabilities of the plant consist of:

Goodwill allocated to plant	150
Land and building, at revalued amount	150
Plant, machinery and equipment, at depreciated cost	400
Investment property at fair value	150
Receivables and financial assets	70
Inventories	100
Loans and borrowings	(200)
Net carrying amount	820

Prior to the classification as non-current asset held for sale, the land and building are revalued at RM250m. Depreciation of plant, machinery and equipment is about 8% per annum. The fair value of the investment property at 28 February 20x8 is determine at RM130m. After deducting allowances for doubtful debts, the receivables and financial assets are valued at RM55m. Testing the inventories for lower of cost and net realisable value results in a write down of RM20m. Loans and borrowings are carried at the amortised cost basis and the amount in the accounts approximates their fair value.

Negotiations to dispose of the manufacturing plant to DK Ltd in the advanced stage and the buyer is willing to pay a price of RM505.5m to buy the manufacturing plant as a whole. Costs of disposal are estimated at RM1.8m.

Required:

1. Remeasure the assets and liabilities of the manufacturing plant immediately before classification as non-current assets held for sale and determine the net carrying amount of the disposal group upon the classification.
2. Calculate the impairment loss and the allocation of the loss to the assets of the disposal group.

Answer rating: 100% (QA)

JCW Bhd As per the accounting standard on Assets held for sale In case of a disposal group to be cla... View the full answer