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Describe the classification of the building in parit permai

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Reference no: EM132579792

On 1 January 2016, Sun & Moon Bhd decided to sell a building in Parit Permai. The building was acquired on 1 January 2010 at the costs of RM10,000,000 with an estimated useful life of 20 years. The building was not being used and made vacant since 1 January 2017. However, only on 1 January 2018, Sun & Moon Bhd engaged a property agent to market the building. The fair value of the building as at that date was RM3,100,000. The market conditions indicated a sale within 12 months is highly probable and the price offered is considered reasonable.

Question 1: Describe the classification of the building in Parit Permai based on the relevant Malaysian Financial Reporting Standard.

a) The building is classified as a property, plant and equipment on 1 January 2018. As at that date, the building is not available for immediate sale and the sale is not highly probable.

b) The building is classified as a non-current asset held for sale on 1 January 2016. As at that date, the building is available for immediate sale and the sale is highly probable.

c) The building is classified as a non-current asset held for sale on 1 January 2018. As at that date, the building is available for immediate sale and the sale is highly probable.

d) The building is classified as a non-current asset held for sale on 1 January 2017. As at that date, the building is available for immediate sale and the sale is highly probable.

Question 2: Discuss the measurement of the building in Parit Permai based on the relevant Malaysian Financial Reporting Standard.

a) The building is initially measured at the cost. The building will be revalued based on the fair value on 1 January 2018.

b) The building is initially measured at the cost. On 1 January 2016, the building is measured at the lower of carrying amount and fair value less cost to sell.

c) The building is initially measured at the cost. On 1 January 2018, the building is measured at the lower of carrying amount and fair value less cost to sell.

d) The building is initially measured at the cost. On 1 January 2017, the building is measured at the lower of carrying amount and fair value less cost to sell.

Question 3: Indicate the impairment loss (if any) of the building to be recognized in the Statement of Profit or Loss.

a) RM3,000,000

b) RM3,900,000

c) RM100,000

d) RM2,900,000

Reference no: EM132579792

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