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Prepare the general journal entries

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Question - Kitchen Décor Ltd had a plant which they decided to dispose of. All criteria for the classification of the plant as a 'held for sale' asset was met on 1 January 2020, when the asset had the following account balances:

Cost: N$100 000

Accumulated depreciation: N$20 000 (depreciation at 10% per annum with a nil residual value)

Accumulated impairment losses: N$18 000

The value in use of the plant was not readily available

The fair value of the plant was determined to be N$65 000 and the costs to sell are N$5 000.

The plant had been measured using the cost as per IAS 16 Property, Plant and Equipment.

On 31 December 2020, the fair value of the plant increased to N$90 000 while the costs to sell amounted to N$5 000.

Required -

i. Prepare the general journal entries to account for the reclassification of the plant on 1 January 2020. Clearly indicate the classifications of the asset in your journals (PPE, NCAHFS).

ii. Calculate the amount of any impairment loss reversal (if any) on 31 December 2020.

iii. Prepare the general journal entries to account for the plant on 31 December 2020.

Reference no: EM133028903

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