Reference no: EM132787250

Warta Sinar Bhd owns a manufacturing plant in Klang. The carrying amount of the manufacturing plant on 1 January 2019 is RM820,000,000. On 1 April 2019, the Board of Warta Sinar Bhd approves a plan to sell the manufacturing plant. The management has initiated an active programmed to sell the property and found a buyer with a firm commitment to buy the manufacturing plant. The buyer is willing to pay at the fair value of RM600,000,000. Carrying amount of the manufacturing plant's as at that date is RM856,700,000. The costs of disposal are estimated at RM1,500,000.

Problem 1: Under which circumstances shall an entity classify a non-current asset as held for sale?

a) If its carrying amount will be recovered principally through continuing use rather than through a sale.

b) If its carrying amount exceeds its market price.

c) If its carrying amount will be recovered principally through a sale transaction rather than through continuing use.

d) If its sale price exceeds its carrying amount.

Problem 2: Upon classifying the manufacturing plant as held for sale and in applying the measurement basis prescribed by MFRS 5, Warta Sinar Bhd may need to recognize an impairment loss for write-down of the asset, if any. Calculate the impairment loss.

a) RM220,000,000

b) RM256,700,000

c) RM258,200,000

d) RM221,500,000

Problem 3: MFRS 5 provides unconditional requirement that the sale of the non-current asset held for sale should be expected to qualify for recognition as a completed sale within one year from the date of classification.

a) True

b) False