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How the property should be classified on july

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Reference no: EM132723743

IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations

Reilly Co., a family-owned company, had a vacant property with a carrying amount of $289,500 at 31 July 2020. On this date, Reilly Co. was able to locate a buyer and the board of the company agreed to sell the property at its present condition. On 31 July 2020, the fair value of the property was $295,000 and the costs to sell it amounted to $7,500. The property has a remaining useful life of 10 years on 31 July 2020. The current year end of Reilly Co. was 31 August 2020 and the sale was complete on 15 September 2020.

Problem a) Explain how the property should be classified on 31 July 2020.

Problem b) Prepare the journal entry for the reclassification as at 31 July 2020. What was the carrying amount of this property at 31 August 2020?

Reference no: EM132723743

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