GROUP ASSIGNMENT ON THE COURSE: INTERMEDIATE FINANCIAL ACCOUNTING I

QUESTION NO. 1 Briefly explain: a) the Concept of non-current asset held for sale, b) the
conditions for classification of Non-Current Assets as held for sale c) Measurement of non-
current asset held for sale, d) change of plans d) disclosure of non-current asset held for sale.

QUESTION NO. 2 ABC Company is committed to a plan to sell a building and has started
looking for a buyer for that building. The company will continue to use the building until another
building is completed to house the office staff located in the building. There is no intention to
relocate the office staff until the new building is completed. Would the building be classified as
held for sale? Why?

QUESTION NO. 3 BB-Company has provided you a list of the properties it owns:

1. Land held by the company for undetermined future use

2. A vacant building owned by the company and to be leased out under an operating lease
3. Property held by the company in the ordinary course of its business
4. Property held by the company for the use in production
5. A hotel owned by ZZ-company a subsidiary of, BB-Company, and for which ZZ-
Company provides security services for its guests’ belongings
6. A property being constructed by the company for future use
7. A building constructed but the company has not decided the purpose for which the asset
is held.
8. A portion of the property being held for investment purposes and another portion being
held for use in the production or supply of goods or services or for administrative
purposes that can be sold separately (or leased separately under a finance lease)
9. A portion of the property being held for investment purposes and another portion being
held for use in the production or supply of goods or services or for administrative
purposes that cannot be sold separately, is the portion being held for use in the
production or supply of goods or services or for administrative purposes significant
10. A portion of the property being held for investment purposes and another portion being
held for use in the production or supply of goods or services or for administrative

1|Page
 purposes that cannot be sold separately but held for use in the production or supply of
goods or services or for administrative purposes insignificant

Required: Classify these non-current assets as PPE, Inventory, investment property, or

Non-current assets held for sale. Mention the reasons for your classification.

QUESTION NO. 4

Given: ABC Company acquired PPE on January 1, 2016 on account. The asset has a cost of br.
1,000,000, estimated useful life of 10 years and zero salvage value. The company uses Straight
line method for periodic depreciation and cost model as accounting policy.

Required:

Task 1: Record the acquisition of the asset on January 1, 2016

Task 2: Determine the amount of annual depreciation, accumulated depreciation and carrying
amount for the first five years of operation using cost model.

2|Page