Investment Property, NCAFS, and Discontinued Operation

Question 1

If a machine is held for capital appreciation or for rental to others, it is an investment property. True or False?

Answer 1

False → must be land or building

Question 2

If cashflow generation is independent to other asset, is it PPE or Investment Property?

Answer 2

Investment Property
- Dependent → PPE

Question 3

If ancilliary services are significant, is it PPE or Investment Property?

Answer 3

Investment Property
- Insignificant → PPE

Question 4

In separate FS, it must be presented as Investmentt Property.

However, in consolidated FS, it will be presented as PPE.

Answer 4

Yes

Question 5

What will be in the Income Statement
- Cost Model
- FV Model

Answer 5

Cost Model
- Depreciation Expense
- Impairment Loss

FV Model
- UGUL on Changes in FV

Question 6

For cost model, FV is for disclosure only.

For FV model, FV is for disclosure + measurement.

What if you cannot determine FV? What model to use?

Answer 6

Yes

Cost Model = until disposal (RV is zero)

Question 7

Transfer (e.g. from PPE to IP) is only allowed when there is a change in use.

Answer 7

Yes

Question 7

Transfer
- under cost model, initial measurement is at CA
- under FV model, initial measurement is at FV

Answer 7

Yes

Question 8

Under FV model
- from Investment Property to PPE, difference will be recorded in Gain / Loss. True or False?
- from Inventory to Investment Property, difference will be recorded in Gain / Loss. True or False?
- from PPE to Investment Property, difference will be recorded in Gain / Loss. True or False?

Answer 8

• True
• True
• From PPE to IP → Revaluation Surplus & Impairment Loss

Question 9

NON CURRENT ASSETS HELD FOR SALE
- recovered by sale transaction (not continuing use)
- could be individual asset or disposal group
- Current Asset

Answer 9

Yes

Question 10

Recognition Criteria
1. Available for Immediate Sale (with usual terms)
2. Sale is Highly Probable

Answer 10

Sale is highly probable
- active plan to locate buyer
- reasonable sale price
- unlikely that the plan will change
- to be completed in 1 year (XPN : events out of control)

Question 11

NCAFS is not subject to depreciation.

Answer 11

Current Asset nga siya diba

Question 12

What if there is a reclassification from NCAFS back to PPE
- what is the measurement?

Answer 12

Lower of CA vs FVLCTS
- CA as if not HFS (adjust for depreciation not recorded)
- FVLCTS at that date

Question 13

DISCONTINUED OPERATIONS
- component of an entity (either to dispose or HFS)
- IS → net of tax (below continuing operations)
- CA and CL → ✗offset
- Asset → ✗ depreciation

Answer 13

Yes