Speakspere Partners Is Scaling Back Operations; the Partnership Has the Following

question 7

Essay

Speakspere Partners is scaling back operations; the partnership has the following assets on its books that it is considering for sale:
a. Speakspere has a parcel of land, valued at $1 million, that is currently vacant. The land is located in an area of the city that was undeveloped and Speakspere had purchased it a number of years ago in anticipation of growth. Actual growth has been slower than expected and has in fact been declining since last year. Speakspere is unsure whether a willing buyer can be found under these conditions.
b. Speakspere's operations are located in an office building and a separate storage facility. Speakspere owns the land on which these facilities reside. The partnership is able to vacate the storage facility on short notice and there is an active market for similar storage. As for the office, Speakspere plans to continue its operations, and does not foresee vacating the office space in the immediate future.
Required:
Determine whether Speakspere should present the assets described above as non-current assets held for sale. Be sure to provide any supporting explanation for your conclusions.

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Definitions:

Interperiod Tax Allocation

The accounting practice of distributing income taxes equally among the different periods affected by temporary differences.

Warranty Expenses

Costs that a company anticipates or incurs due to the repair or replacement of defective products under warranty.

MACRS Depreciation

A method of accelerated depreciation allowed by the IRS for tax purposes, applicable to tangible assets over their useful lives.

Percentage-Of-Completion Method

An accounting method that recognizes revenue and expenses of long-term contracts as a percentage of work completed during the period.