WebinarWebinar??????2018/12--Q4(b)-Incometax2020/3--Q1(d)-FA(ECL)2020/12--Q3(b)-IAS36&IFRS2021/3--Q2(b)-IAS32(classificationofFL&Equity)2021/3--Q1(b)–IAS19(Assetceiling)2021/12--Q2(b)(c)–IFRS15&IAS2018/12Q4(b)2018/12Q4(b)Hollsgroup-Withreferencetotheaboveinformation,explaintotheinvestor,thenatureofaccountingfortaxationinfinancialstatements.Note:Youranswershouldexplainthetaxreconciliation,discusstheimplicationsofcurrentandfuturetaxrates,andprovideanexplanationofaccountingfordeferredtaxationinaccordancewithrelevantIFRSStandards.(14marks)Professionalmarkswillbeawardedinquestion4(b)forclarityandqualityofdiscussion.(22018/122018/12Q4(b)Hollsgroup–Marking2018/12Q4(b)Holls2018/12Q4(b)HollsHollsGroupispreparingitsfinancialstatementsfortheyearended30November20X7.ThedirectorsofHollshavebeenaskedbyaninvestortoexplaintheaccountingfortaxationinthefinancialTheGroupoperatesinseveraltaxjurisdictionsandissubjecttoannualtaxauditswhichcanresultinamendmentstotheamountoftaxtobepaid.Theprofitfromcontinuingoperationswas$300millionintheyearto30November20X7andthereportedtaxchargewas$87million.Theinvestorwasconfusedastowhythetaxchargewasnotthetaxratemultipliedbytheprofitfromcontinuingoperations.Thedirectorshavepreparedareconciliationofthenotionaltaxchargeonprofitsascomparedwiththeactualtaxchargeforthe2018/12Q4(b)Holls2018/12Q4(b)HollsTheamountofincometaxespaidasshowninthestatementofcashflowsis$95millionbutthereisnocurrentexplanationofthetaxeffectsoftheaboveitemsinthefinancialstatements.ThetaxrateapplicabletoHollsfortheyearended30November20X7is22%.Thereisaproposalinthelocaltaxlegislationthatanewtaxrateof25%willapplyfrom1January20X8.InthecountrywhereHollsisdomiciled,taxlawsandratechangesareenactedwhenthegovernmentapprovesthelegislation.Thegovernmentapprovedthelegislationon12November20X7.ThecurrentweightedaveragetaxratefortheGroupis27%.Hollsdoesnotcurrentlydiscloseitsopinionofhowthetaxratemayalterinthefuturebutthegovernmentislikelytochangewiththeresultthatanewgovernmentwillalmostcertainlyincreasethecorporatetaxrate.2018/12Q4(b)2018/12Q4(b)HollsAt30November20X7,Hollshasdeductibletemporarydifferencesof$45millionwhichareexpectedtoreverseinthenextyear.Inaddition,Hollsalsohastaxabletemporarydifferencesof$5millionwhichrelatetothesametaxablecompanyandthetaxauthority.Hollsexpects$3millionofthosetaxabletemporarydifferencestoreversein20X8andtheremaining$2milliontoreversein20X9.Priortothecurrentyear,Hollshadmadesignificantlosses.2018/12Q4(b)Holls2018/12Q4(b)Hollsgroup-Currenttaxisbasedontaxableprofitfortheyear.Taxableprofitisdifferentfromaccountingprofitduetotemporarydifferencesbetweenaccountingandtaxtreatments,andduetoitemswhicharenevertaxableortaxdeductible.Taxbenefitssuchastaxcreditsarenotrecognisedunlessitisprobablethatthetaxpositionsaresustainable.TheGroupisrequiredtoestimatethecorporatetaxineachofthemanyjurisdictionsinwhichitoperates.TheGroupissubjecttotaxauditsinmanyjurisdictions;asaresult,theGroupmayberequiredtomakeanadjustmentinasubsequentperiodwhichcouldhaveamaterialimpactontheGroup’sprofitfortheyear.2018/12Q4(b)2018/12Q4(b)Hollsgroup-TaxThetaxratereconciliationisimportantforunderstandingthetaxchargereportedinthefinancialstatementsandwhytheeffectivetaxratediffersfromthestatutoryrate.Mostcompanieswillreconcilethegroup’sannualtaxexpensetothestatutoryrateinthecountryinwhichtheparentisbased.Hencetherateof22%isusedinthetaxreconciliation.Itisimportantthatthereconciliationexplainsthereasonsforthedifferencesbetweentheeffectiverateandthestatutoryrate.Thereshouldbeminimaluseofthe‘other’category.Inthiscase,theothercategoryisquitesignificant($14million)andthereisnoexplanationofwhat‘other’constitutes.One-offandunusualitemscanhaveasignificanteffectontheeffectivetaxrate,butfinancialstatementsandnotesoftendonotincludeadetaileddiscussionofthem.Forexample,thebrandimpairmentanddisposalsofbusinessesshouldbeexplainedtoinvestors,astheyareprobablymaterialitems.Theexplanationshouldincludeanypotentialreversalofthetreatment.Someprofitsrecognisedinthefinancialstatementsarenon-taxablesuchasthetaxrelatingtonon-taxablegainsondisposalsofbusinessesandinsomejurisdictions,taxationreliefonimpairmentlosseswillnotbeallowablefortaxation.Thereasonsfortheseitemsnotbeingallowedfortaxationshouldbeexplainedto2018/12Q4(b)2018/12Q4(b)Hollsgroup-TaxAstheGroupisoperatinginmultiplecountries,theactualtaxratesapplicabletoprofitsinthosecountriesaredifferentfromthelocaltaxrate.Theoverseastaxratesarehigherthanlocalrates,hencetheincreaseinthetaxationchargeof$10m.Thelocalrateisdifferentfromtheweightedaveragetaxrate(27%)oftheGroupbasedonthedifferentjurisdictionsinwhichitoperates.InvestorsmayfeelthatusingtheweightedtaxrateinthereconciliationgivesamoremeaningfulnumberbecauseitisabetterestimateofthetaxratetheGroupexpectstopayoverthelongterm.Investorswillwishtounderstandthecompany’sexpectedlong-termsustainabletaxratesotheycanpreparetheircashfloworprofitforecasts.Informationaboutthesustainabilityofthetaxrateoverthelongtermismoreimportantthanwhethertherateishighorlowcomparedtootherjurisdictions.Anadjustmentcanbemadetoaninvestor’sfinancialmodelforalong-termsustainablerate,butnotforavolatileratewherethereisnocertaintyoverfutureperformance.Formodellingpurposes,anunderstandingoftheactualcashtaxespaidiscriticalandthecashpaidof$95millioncanbefoundinthestatementofcashflows.2018/122018/12Q4(b)Hollsgroup-DeferredProvisionfordeferredtaxismadefortemporarydifferencesbetweenthecarryingamountofassetsandliabilitiesforfinancialreportingpurposesandtheirvaluefortaxpurposes.Theamountofdeferredtaxreflectstheexpectedrecoverableamountandisbasedontheexpectedmannerofrecoveryorsettlementofthecarryingamountofassetsandliabilities,usingthebasisoftaxationenactedorsubstantivelyenactedbythefinancialstatementdate.DeferredtaxassetsarenotrecognisedwhereitismorelikelythannotthattheassetswillnotberealisedinthefutureandreferencetoIAS37Provisions,ContingentLiabilitiesandContingentAssetsisusefulinthisregard.Theevaluationofdeferredtaxassets’recoverabilityrequiresjudgementstobemaderegardingtheavailabilityoffuturetaxableincome.2018/12Q4(b)2018/12Q4(b)Hollsgroup-Managementassessestheavailableevidencetoestimateifsufficientfuturetaxableincomewillbegeneratedtousetheexistingdeferredtaxassets.Asignificantpieceofobjectivenegativeevidenceevaluatedwasthelossincurredintheperiodpriortotheperiodended30November20X7.Suchobjectiveevidencemaylimittheabilitytoconsiderothersubjectiveevidencesuchasprojectionsforfuturegrowth.Deferredtaxesareoneofthemostdifficultareasofthefinancialstatementsforinvestorsunderstand.Thusthereisaneedforaclearexplanationofthedeferredtaxbalancesandananalysisoftheexpectedtimingofreversals.Thiswouldhelpinvestorsseethetimeperiodoverwhichdeferredtaxassetsarisingfromlossesmightreverse.Itwouldbehelpfulifthecompanyprovidedabreakdownofwhichreversalswouldhaveacashtaximpactandwhichwouldnot.Astheproposedtaxlawwasapproved,itisconsideredtobeenacted.Therefore,therateof25%shouldbeusedtocalculatethedeferredtaxliabilityassociatedwiththerelevantitemswhichaffectdeferredtaxation.2018/122018/12Q4(b)Hollsgroup-At30November20X7,Hollshasdeductibletemporarydifferencesof$4·5millionwhichareexpectedtoreverseinthenextyear.Inaddition,Hollsalsohastaxabletemporarydifferencesof$5millionwhichrelatetothesametaxablecompanyandthetaxauthority.Hollsexpects$3millionofthosetaxabletemporarydifferencestoreversein20X8andtheremaining$2milliontoreversein20X9.Thusadeferredtaxliabilityof$1·25million($5millionx25%)shouldberecognisedandas$3millionofthesetaxabletemporarydifferencesareexpectedtoreverseintheyearinwhichthedeductibletemporarydifferencesreverse,Hollscanalsorecogniseadeferredtaxassetfor$0·75million($3millionx25%).Therecognitionofadeferredtaxassetfortherestofthedeductibletemporarydifferenceswilldependonwhetherfuturetaxableprofitssufficienttocoverthereversalofthisdeductibletemporarydifferenceareexpectedtoarise.Deferredtaxassetsandliabilitiesmustberecognisedgrossinthestatementoffinancialposition.However,itmaybepossibletooffsetthedeferredtaxassetsandthedeferredtaxliabilitiesifthereisalegallyenforceablerighttooffsetthecurrentincometaxassetsagainstcurrentincometaxliabilitiesastheamountsrelatetoincometaxleviedbythesametaxationauthorityonthesametaxableentity.2018/122018/12Q4(b)Hollsgroup-Aftertheenactmentofanewtaxlaw,whenmaterial,Hollsshouldconsiderdisclosingtheanticipatedcurrentandfutureimpactontheirresultsofoperations,financialposition,liquidity,andcapitalresources.Inaddition,Hollsshouldconsiderdisclosuresinthecriticalaccountingestimatessectionofthemanagementcommentarytotheextentthechangescouldmateriallyaffectexistingassumptionsusedinmakingestimatesoftax-relatedbalances.Changesintaxlawsandratesmayaffectrecordeddeferredtaxassetsandliabilitiesandtheeffectivetaxrateinthefuture.2020/32020/3Q1(d)Hummings-(d)acalculationanddiscussionofhowthebondsshouldbeaccountedforinthefinancialstatementsofHummingsCoasat31December20X3andfortheyearended31December20X4,includinganyimpairmentlosses.(11marks)2020/32020/3Q1(d)Hummings–Marking2020/3Q1(d)Impairmentof2020/3Q1(d)ImpairmentofOn31December20X3,HummingsCopurchased$10million5%bondsinStaveCoatparvalue.Thebondsarerepayableon31December20X6andtheeffectiverateofinterestis8%.HummingsCo’sbusinessmodelistocollectthecontractualcashflowsoverthelifeoftheasset.At31December20X3,thebondswereconsideredtobelowriskandasaresultthe12-monthexpectedcreditlossesareexpectedtobe$10,000.On31December20X4,StaveCopaidthecouponinterest,however,atthatdatetherisksassociatedwiththebondsweredeemedtohaveincreasedsignificantly.Thepresentvalueoftherepaymentsfortheyearended31December20X5wereestimatedtobe$462,963andtheprobabilityofdefaultis3%.At31December20X4,itisalsoanticipatedthatnofurthercouponpaymentswouldbereceivedduringtheyearended31December20X6andonlyaportionofthenominalvalueofthebondswouldberepaid.Thepresentvalueofthesecashshortfallswasassessedtobe$6,858,710witha5%likelihoodofdefaultintheyearended31December20X6.2020/32020/3Q1(d)Hummings-SincethebusinessmodelofHummingsCoistocollectthecontractualcashflowsofthebondsoverthelifeoftheasset,thebondsshouldbemeasuredatamortisedcost.Allfinancialassetsincludingamortisedcostassetsshouldinitiallyberecognisedatfairvalue.Thiswouldbeequaltothe$10,000,000paidonacquisitionofthebonds.【按照AMC,初始計(jì)量金額10m】IFRS9requiresentitiestoadoptanexpectedvalueapproachtotheconsiderationofimpairmentlossesonfinancialassets.Onacquisition,thebondsareconsideredlowriskandarenotcreditimpaired.Thebondswouldbeclassifiedasastageonefinancialassetasat31December20X3.ThismeansthatHummingsCoshouldcreateanexpectedcreditlossequalto12monthsexpectedcreditlosses.Itisimportanttoappreciatethatthe12-monthexpectedcreditlossisnotthelifetimeexpectedcreditlosswhichanentitywillincurwhichitpredictswilldefaultinthenext12months.2020/3Q1(d)Hummings-2020/3Q1(d)Hummings-The12-monthexpectedcreditlossisdefinedasaportionofthelifetimeexpectedcreditlosseswhichrepresenttheexpectedcreditlosseswhichresultfromadefaultwithinthenext12months.Ineffect,theproportionofthelifetimeexpectedcreditlosseswhichareexpectedshouldadefaultoccurwithin12monthsareweightedbytheprobabilityofadefaultoccurring.【12mthECL定義】HummingsCoshouldthereforerecogniseadefaultallowanceof$10,000asat31December20X3.Thiswillbeexpensedtoprofitorlossandaseparateallowancecreatedratherthanoffsetagainstthe$10,000,000bonds.Theallowanceis,however,nettedoffthe$10,000,000bondinthestatementoffinancialpositionofHummingsCoasat31December20X3.Thecarryingamountofthebondsinthestatementoffinancialpositionat31December20X3willbe$9·99million($10million–$10,000).2020/3Q1(d)2020/3Q1(d)Hummings-Asthebondsaretobemeasuredatamortisedcost,theeffectiverateofinterestof8%willbeincludedinprofitorlossandaddedtothebonds.Thisiscalculatedontheinitial$10,000,000andisnotaffectedbythelossallowanceof$10,000.Thecouponinterestof$500,000($10,000,000x5%)isdeductedfromthecarryingamountofthebonds.Thismeansthatthebondswouldhaveacarryingamountof$10,300,000at31December20X4beforeconsideringtheimpairment2020/3Q1(d)Hummings-2020/3Q1(d)Hummings-At31December20X4,therehasbeenasignificantincreaseincreditrisk.Asnoactualdefaulthasyetoccurred,thebondsshouldbeclassifiedasastagetwofinancialasset.ThismeansthatHummingsCoshouldmakeanallowancetorecognisethelifetimeexpectedcreditlosses.Thisisdefinedastheexpectedcreditlossescashshortfallswhichresultfromallpossibledefaulteventsovertheexpectedlifeofthebonds.【Lifetime定義】Anallowanceisrequiredequaltothepresentvalueoftheexpectedlossincontractualcashflowsasweightedbytheprobabilityofdefault.TheexpecteddefaultlossesdiscountedusingtheoriginaleffectiverateofinterestofTheexpectedlossallowanceshouldbeincreasedto$356,825withanexpenserecordedinprofitorlossof$346,825($356,825–$10,000).Thelossallowanceisdeducteddirectlyfromthebondswithfutureinterestincomerecordedonthegrossposition.Thecarryingamountofthebondsat31December20X4wouldbe$9,943,175($10,300,000–$356,825).2020/122020/12Q3(b)(i)CorbelCo-DiscussthefollowingaccountingissuesrelatingtoCorbelCo’sfinancialstatementsfortheyearended31December20X7inaccordancewithIFRS(i)whethertheJengiCobrandnamewillbeaccountedforseparatelyfromgoodwillonacquisitionandwhetheritshouldbeaccountedforasaseparatecashgeneratingunitaftertheintegrationofthemanufacturingunits;(4marks)2020/122020/12Q3(b)(i)CorbelCo–Marking2020/12Q3(b)(i)2020/12Q3(b)(i)CorbelCorbelCotradesintheperfumesector.Ithasrecentlyacquiredacompanyforitsbrand‘Jengi’,purchasedtwoadditionalbrandnames,andhasannouncedplanstocloseitsItalianstores.CorbelCoalsoopenedanewstoreonaprimesiteinParis.Thecurrentfinancialyearendis31December20X7.AcquisitionofJengiOn1January20X7,CorbelCoacquired100%ofJengiCo.Bothcompaniesoperateintheperfumesector.CorbelCointendstomergethemanufactureofJengiCo’sproductsintoitsownfacilitiesandcloseJengiCo’smanufacturingunit.JengiCo’sbrandnameiswellknowninthesector,retailingatpremiumprices,therefore,CorbelCowillcontinuetosellproductsundertheJengibrandnameafteritsregistrationhasbeentransferredanditsmanufacturingunitshavebeenintegrated.ThedirectorsofCorbelCobelievethatmostofthevalueofJengiCowasderivedfromthebrandandthereisnoindicationoftheimpairmentofthebrandat31December20X7.2020/12Q3(b)(i)Corbel2020/12Q3(b)(i)CorbelCo-TheJengibrandwillgeneratefutureeconomicbenefitsbyincreasingsalesvolumesandbythepotentialofpremiumprices.Controloverthesepotentialfuturebenefitsisachievedbytheregistrationofthebrand.Theregistrationalsosatisfiestherequirementtoidentifytheintangibleassetseparatelyfromgoodwillandestimateitsfairvalue.IAS36ImpairmentofAssetsdefinesacashgeneratingunit(CGU)asthesmallestidentifiablegroupofassetsthatgeneratescashinflowsthatarelargelyindependentofthecashinflowsfromotherassetsorothergroupsofassets.CGU定義However,brandsaretypicallynotaseparateCGUunderIFRS.Thebrandwouldbetestedforimpairmenttogetherwiththeassociatedmanufacturingfacilities.Thebrandwouldbeseparatelyidentifiedandvalued,andshouldbeallocatedtoeachofCorbelCo’scashgeneratingunitsthatareexpectedtobenefitfromthesynergiesofthe【IAS36recognisesthatsometimesthereisnobasisforallocatingthebrandtoanindividualCGUthatisnotarbitrarysoitpermitsittobeallocatedtoagroupofCGUs.】2020/122020/12Q3(b)(i)CorbelCo–Good2020/122020/12Q3(b)(i)CorbelCo–Poor2020/122020/12Q3(b)(ii)CorbelCo-DiscussthefollowingaccountingissuesrelatingtoCorbelCo’sfinancialstatementsfortheyearended31December20X7inaccordancewithIFRS(ii)howtoaccountforintangibleassetswithanindefinitelifeandwhethertheLocustandClaraperfumebrandnamescanberegardedashavinganindefinitelife;(6marks)知識知識Indefinitelife:noforeseeablelimittotheperiodoverwhichtheassetisexpectedtogeneratenetcashinflowsfortheentity.Manyfactorsareconsideredindeterminingtheusefullifeofanintangibleasset,Theexpectedusageoftheassetbytheentityandwhethertheassetcouldbemanagedefficientlybyanothermanagementteam;Typicalproductlifecyclesfortheassetandpublicinformationonestimatesofusefullivesofsimilarassetsthatareusedinasimilarway;Technical,technological,commercialorothertypesofThestabilityoftheindustryinwhichtheassetoperatesandchangesinthemarketdemandfortheproductsorservicesoutputfromtheasset;ExpectedactionsbycompetitorsorpotentialThelevelofmaintenanceexpenditurerequiredtoobtaintheexpectedfutureeconomicbenefitstheassetandtheentity’sabilityandintentiontoreachsuchaTheperiodofcontrolovertheassetandlegalorsimilarlimitsontheuseoftheasset,suchastheexpirydatesofrelatedleases;andWhethertheusefullifeoftheassetisdependentontheusefullifeofotherassetsofthe2020/122020/12Q3(b)(ii)CorbelCo–Marking2020/12Q32020/12Q3(b)(ii)CorbelAcquisitionofperfumeInadditiontonowowningtheJengiCobrand,CorbelCohasacquiredtwootherperfumebrandnamestopreventrivalcompaniesacquiringthem.Thefirstperfume(Locust)hasbeensoldsuccessfullyformanyyearsandhasanestablishedmarket.Thesecondisanewperfumewhichhasbeennamedafterafamousactor(Clara)whointendstopromotetheproduct.ThedirectorsofCorbelCobelievethatthetwoperfumebrandnameshaveanindefinitelife.2020/122020/12Q3(b)(ii)CorbelCo-Intangibleassetshaveanindefiniteusefullifewhenthereisnoforeseeablelimittotheperiodoverwhich,basedonananalysisofallrelevantfactors,theassetisexpectedtogeneratenetcashinflowsfortheentity(definitionofindefinitelife).Anintangibleassetwithanindefiniteusefullifeshouldnotbeamortised.IAS36ImpairmentofAssets,requiresanentitytotestanintangibleassetwithanindefiniteusefullifeforimpairmentbycomparingitsrecoverableamountwithitscarryingamount:annually,wheneverthereisanindicationthattheintangibleassetmaybe2020/122020/12Q3(b)(ii)CorbelCo-Theusefullifeofanintangibleassetthatisnotbeingamortisedshouldbereviewedeachperiodtodeterminewhethereventsandcircumstancescontinuetosupportanindefiniteusefullifeassessmentforthatasset.Iftheydonot,thechangeintheusefullifeassessmentfromindefinitetofiniteshouldbeaccountedforasachangeinanaccountingestimateinaccordancewithIAS8AccountPolicies,ChangesinEstimatesandErrors.2020/122020/12Q3(b)(ii)CorbelCo-CorbelCoshouldconsidervariousfactorstodeterminewhetherthebrandnamescanbeconsideredtohaveausefullife.ThesewillincludetheextenttowhichCorbelCoispreparedtosupportthebrandandtheextenttowhichthebrandhaslong-termpotentialandhashadprovensuccess.Perfumeisoftensubjecttomarketandfashiontrendsandtherefore,anassessmentofhowresistantthebrandsaretochangeshouldbemade.AlsoCorbelCohaspurchasedthebrandsasadefensivemeasuretopreventrivalcompaniesacquiringthem.Therefore,theremaybeadoubtastothesupportthatCorbelComaybepreparedtogivetothebrands.2020/122020/12Q3(b)(ii)CorbelCo-TheLocustperfumehasbeensoldsuccessfullyinthemarketformanyyearsandcouldbedeemedtohaveanindefinitelife.TheClaraperfumeislinkedtothepopularityoftheactorandtherefore,itisdifficulttoassesswhetherthebrandhasanindefinitelifeasitislikelytobedependentuponthelongevityofthepopularityoftheactor.InthecaseoftheClaraperfume,itisdifficulttostatethatthebrandwillhaveanindefinitelife.ThusClaraislikelytohaveafinitelife.2020/122020/12Q3(b)(ii)CorbelCo–Good2020/122020/12Q3(b)(ii)CorbelCo–Poor2020/122020/12Q3(b)(iii)CorbelCo-DiscussthefollowingaccountingissuesrelatingtoCorbelCo’sfinancialstatementsfortheyearended31December20X7inaccordancewithIFRS(iii)howtoaccountfortheproposedclosureofthesixstoresandthesuggestedclosureoftheremainingstores;and(6marks)2020/122020/12Q3(b)(iii)CorbelCo–Marking2020/12Q32020/12Q3(b)(iii)CorbelPlantocloseandsellCorbelCoapprovedandannouncedaplantocloseandsellallsixItalianstoreson31December20X7.Thesixstoreswillcloseafteraliquidationsalewhichwilllastforthreemonths.Managementhascommittedtoaformalplanfortheclosureofthesixstoresandhasalsostartedanactivesearchforasinglebuyerfortheirassets.ThestoresarebeingclosedbecauseoftheincreaseddemandgeneratedbyCorbelCo’sinternetsales.Alocalnewspaperhaswrittenanarticlesuggestingthatupto30storesmaybeclosedwithalossof500jobsacrosstheworld,overthenextfiveyears.ThedirectorsofCorbelhavedeniedthatthisisthecase.2020/122020/12Q3(b)(iii)CorbelCo-IFRS5Non-currentAssetsHeldforSaleandDiscontinuedOperationsstatesthatimmediatelybeforeclassifyingadisposalgroupasheldforsale,thecarryingamountsoftheassetsandliabilitieswithinthegrouparemeasuredinaccordancewiththeapplicableIFRSstandards.屬于廢話，可不寫Afterclassificationasheldforsale,disposalgroupsaremeasuredatthelowerofcarryingamountandvaluelesscoststosell.Impairmentmustbeconsideredbothatthetimeofclassificationasheldforsaleandsubsequentlyafterclassification.2020/122020/12Q3(b)(iii)CorbelCo-ThesixstoresshouldbeaccountedforasadiscontinuedoperationastheyrepresentacomponentofCorbelCoandareaseparategeographicalareaofoperations.TheapprovalandannouncementofaplantoclosethesixItalianstoresisanindicationthattheassetsattributabletothediscontinuingoperationmaybeimpaired.Inaddition,thesixstoreswouldbeclassifiedasa‘disposalgroup’whichisagroupofassetsthat,anentityintendstodisposeofinasingletransaction.Themeasurementbasisrequiredfornon-currentassetsclassifiedasheldforsaleisappliedtothegroupasawhole,andanyresultingimpairmentlossreducesthecarryingamountofthenon-currentassetsinthedisposalgroupintheorderofallocationrequiredbyIAS36.Additionally,theremaybeaneedtoprovidefortheadditionalcostsofclosuresuchasredundancycosts,underIAS37Provisions,ContingentliabilitiesandContingentAssets.2020/12Q3(b)(iii)CorbelCo2020/12Q3(b)(iii)CorbelCo-Attheendofeachreportingperiod,anentityisrequiredtoassesswhetherthereisanyindicationthatanassetmaybeimpaired,i.e.itscarryingamountmaybehigherthanitsrecoverableamount.IAS36hasalistofexternalandinternalindicatorsofimpairment.Ifthereisanindicationthatanassetmaybeimpaired,thentheasset’srecoverableamountmustbecalculated.Wheneverthereisanindicationofimpairment,theentityestimatestherecoverableamountoftheassetandrecordsanimpairmentiftherecoverableamountislowerthanthecarryingamount.2020/122020/12Q3(b)(iii)CorbelCo-AlthoughtherehasbeenalocalnewspaperarticlethatCorbelCoistoshut30storeswithalossof500jobsacrosstheworldoverthenextfiveyears,therehasbeennoformalannouncementbyCorbelCoandtherefore,untiltherehasbeenformalplansdrawnuptoclosetheadditionalstoresthereshouldbenoprovisionsmadeforthestorespotentialclosureandlossofjobs.Itisfeasiblethattheclosureoftheadditional24storeswillnottakeplace,andthereisnoconstructiveobligationunlessthereisatleastadetailedformalplan.Thedirectorshavedeniedthefactthattheadditionalstoreswillbeclosed.2020/122020/12Q3(b)(iii)CorbelCo–Good2020/122020/12Q3(b)(iii)CorbelCo–Poor2020/122020/12Q3(b)(iv)CorbelCo-DiscussthefollowingaccountingissuesrelatingtoCorbelCo’sfinancialstatementsfortheyearended31December20X7inaccordancewithIFRS(iv)whethertheprimarystoreshouldbetestedforimpairmentat31December20X7andwhethertheinternetsalescanbeattributedtothisstore.(4marks)2020/122020/12Q3(b)(iv)CorbelCo–Marking2020/12Q3(b)(iv)CorbelCorbelCo’sprimary2020/12Q3(b)(iv)CorbelCorbelCo’sprimaryCorbelCo’sprimarystoreislocatedincentralParis.Ithasonlyrecentlybeenopenedatasignificantcostwiththeresultthatmanagementbelievesitwillmakealossinthecurrentfinancialyearto31December20X7.Thisloss-makingisnotofconcernastheperformanceisconsistentwithexpectationsforsuchanewandexpensivestoreandmanagementbelievesthatthenewstorewillhaveapositiveeffectonCorbelCo’sbrandimage.Ifimpairmenttestingoftheprimarystoreweretoberequired,thenCorbelCowouldincludethecashflowsfromallinternetsalesinthisassessment.ThegoodssoldviatheinternetaresourcedfromeitherCorbelCo’scentraldistributioncentreorindividualstores.Internetsalesareeitherdeliveredtothecustomer’shomeorcollectedbythecustomerfromthestoresupplyingthegoods.2020/12Q3(b)(iv)Corbel2020/12Q3(b)(iv)CorbelCo-Asstatedin(a)(ii),anentityneedstoassessattheendofeachreportingperiodwhetherthereisanyindicationthatanassetmaybeimpaired.Anindicationofimpairmentiswhethertheperformanceoftheassetisworsethanexpected.Astheprimarystoreisperforminginlinewithexpectationsitwouldappearthatatpresent,thereisnoindicationofimpairmentandthereforenoimpairmenttestisrequired.【Additionally,ifCorbelCofeelsthattheprimarystorebenefitsalltheotherstor