Berko Ltd acquired all the equity shares in Jamila Ltd on 1 January 2018 for a consideration of GH¢1,250 million. The carrying amount and fair value of the identifiable net assets at acquisition were GH¢1,230 million. On 31 December 2020, Berko Ltd was in the process of selling its entire shareholding in Jamila Ltd, and so it was decided that Jamila Ltd should be treated as a disposal group held for sale in accordance with IFRS 5: Non-current Assets Held for Sale and Discontinued Operations at that date. The carrying amounts of Jamila Ltd’s net assets before classification as held for sale at 31 December 2020 in the individual statement of financial position are as follows:
                                                                                                                          GH¢’million
Property, plant and equipment                                                                           836
Intangibles (excluding goodwill)                                                                          428
Current assets (at recoverable amount)                                                             584
Non-current liabilities                                                                                          (322)
Current liabilities                                                                                                  (254)
.                                                                                                                               1,272

The group has a policy of revaluing its property, plant and equipment in accordance with IAS 16: Property, Plant and Equipment. There have been no revaluations or any other gains or losses included within Jamila Ltd’s different components of equity since the date of acquisition as the carrying amount was deemed to be a close enough approximation to its fair value. However, on 31 December 2020, property with a carrying amount of GH¢330 million was considered to have a fair value of GH¢340 million. No adjustment has yet been made for this fair value. The total fair value less costs to sell off the disposal group at 31 December was estimated to be GH¢1,220 million. There have been no previous impairments to the goodwill of Jamila Ltd.

Required:
Recommend to the directors of Berko Ltd how the above transaction should be accounted for in the consolidated financial statements as at 31 December 2020 including financial statement extracts in accordance with relevant International Financial Reporting Standards.         (9 marks)

IFRS 5: Non-current Assets Held for Sale and Discontinued Operations sets out the principles governing the measurement and presentation of non-current assets that are expected to be realised through sale rather than through continuing use. The standard also deals with reporting the results of operations that qualify as discontinued operations.

Required:
Identify TWO (2) conditions which must be present in order to present the results of an operation as “discontinued” and the accounting treatment that applies when such a classification is deemed appropriate.                                                      (4 marks)

Asawasi Ltd made a decision to sell a business unit on 15 June 2017, and the criteria to classify the unit as held for sale were met on 1 July 2017. Asawasi Ltd’s accounting year end is 31 December. At 1 July 2017, the carrying amount of the assets and liabilities of the business unit (before any 2017 depreciation or revaluation adjustments) was as follows:
.                                                                 GH¢ million
Land and buildings                                       120
Equipment                                                     50
Trade receivables                                         30
Inventories                                                    20
Trade payables                                           (26)

Additional Information:
i) The land and buildings are held under the revaluation model of IAS 16: Property, Plant and Equipment and were last revalued on 31 December 2016 to GH¢120 million. Their market valuation on 1 July 2017 was GH¢124 million and selling costs were estimated at GH¢2.5 million at that date. Residual value was, and continues to be, expected to be higher than cost.

ii) The equipment is held under the cost model of IAS 16. The equipment was purchased on 1 July 2015 for GH¢80 million and is being depreciated straight line over a four-year period to a zero residual value. Its sale value at 1 July 2017 was GH¢55 million. Selling costs are insignificant.

iii) The trade receivables are recorded at invoiced value, reduced by any allowances for credit losses recognised at 31 December 2016. No adjustment to these allowances was necessary at 1 July 2017. The receivables, if factored, would realise approximately GH¢26 million, net of transaction costs at 1 July 2017.

iv) The inventories are merchandise purchased for resale and are held at cost. Their market value at 1 July 2017 was GH¢28 million. Associated selling costs would amount to GH¢1.4 million.

v) It was anticipated at 1 July 2017 that the business unit will be sold for GH¢200 million, net of selling costs, to a rival company in a single transaction.

Required:
In respect of Asawasi Ltd’s year ended 31 December 2017, show, and briefly explain, the amount recognised as Non-Current Assets Held for Sale under IFRS 5 at 1 July 2017 and the impairment charge (if any) for the business unit.                (5 marks)

Explain with justification, whether each of the following could most likely be classified as a discontinued operation under IFRS 5: Non-current Assets Held for Sale and Discontinued Operations in this year’s financial statements:
i) A reportable operating segment that met the definition of held for sale after the year end, but before the financial statements were authorised for issue.                                                                                                                                                 (1 mark)

ii) A reportable operating segment that was closed down during the financial year. The assets of the segment were broken up and used in other divisions of the company.                                                                                                                           (2 marks)

iii) A division of a business, classified as held for sale, that was correctly treated as a discontinued operation in last year’s financial statements, but which has not been sold by this year-end due to the sale being referred to the National Insurance Commission, which regulates the Insurance industry. The commission is not expected to report its findings until 6 months after this year end.                                                                                                                                                                    (2 marks)