On 1 October Godwit Co classified a building as held for sale. Its carrying amount was then $1,200,000. Its fair value was $1,050,000 and estimated costs to sell were $30,000. At what amount should the building be measured on classification, and how is it treated afterwards?

Correct answer: C) $1,020,000, and depreciation stops

Explanation

IFRS 5 measures held-for-sale assets at the lower of carrying amount and fair value less costs to sell. Fair value less costs to sell = $1,050,000 - $30,000 = $1,020,000, which is lower than $1,200,000, so an impairment loss of $180,000 is recognised. Assets classified as held for sale are not depreciated.