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What is the correct treatment of this NCA?

Non Current Assets were undertaken and I am told to apply the right IAS to the following question

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The company has constructed and developed a factory for Al Aqsa Co. at the cost of 650,000. Factory is completed this year and the cost plus 25% amount will be recieved by the end this year? 

Is it IAS 16, 36, 38, 40

IFRS 5 or IFRS 16?? Please Help!

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By Ruddles
06th Nov 2017 22:19

In what capacity are you asking the question?

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to Ruddles
06th Nov 2017 23:18

Well, as it says under his title he's a student.

So it's probably an exam/assignment question.

Of course, this is International Standards and I doubt there are many here who have read IAS/IFRS so he isn't likely to get many useful answers anyway. (Doesn't help that I don't fully understand the question)

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07th Nov 2017 06:59

I am sorry that i didn't make it clear enough, you're right this is an assignment and I have to advise the company about the correct treatment of the above property in the financial statement and apply a relevant IAS covering Non Current Assets

These are the options i was given - IAS 16, 36, 38, 40 IFRS 5 or IFRS 16

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By Ruddles
to mastahmind_
07th Nov 2017 08:26

In case you hadn’t realised, Accounting Web is not a recognised training organisation.

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to Ruddles
07th Nov 2017 08:33

Okay thank you i will look elsewhere :)

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By JPK
07th Nov 2017 09:14

Hi

IAS 16 relates to non-current assets and deals with recognition, valuation, revaluation and depreciation.

IAS 36 relates to impairment of assets.

So I guess it's these two that you need.

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to JPK
07th Nov 2017 10:29

Thank you very much :)

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By rhino83
07th Nov 2017 09:44

From reading the query it sounds like the company have constructed a factory on behalf of a customer, in which case IAS 11 - construction contracts would apply.

Or IAS 2 - Inventories (Stock in English)

IAS 16 and 36 could be relevant as previously mentioned, but only if they have constructed the factory for themselves.

Can't see how IAS 38 Intangible assets - would be applicable.
IAS 40 - Investment Properties - may be applicable, again depending on the planned use.

IFRS 5 - Non-current assets held for sale and discontinued operations - unlikely.

IFRS 16 - Leases - unlikely.

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to rhino83
07th Nov 2017 10:28

Thanks a lot, I will ask if it is possible to use IAS 11 as it is not on the list given but I also think its correct. If not i would go for IAS 16 & 36 :)

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By JPK
to rhino83
07th Nov 2017 10:37

I got confused about which company he was looking to advise. :)

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to JPK
07th Nov 2017 11:53

I am writing a report to advise company A, which is constructing the factory for Al Aqsa Co.

Therefore i am advising (company A) regarding the treatment of the property

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By rhino83
to mastahmind_
07th Nov 2017 12:04

Is this a homework question or a real life scenario?

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to rhino83
07th Nov 2017 12:21

No its not a real life scenario, its a question for a college assignment.

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