A company has an office tower that is classified as an investment property under IFRS. The building had a fair value of $46,200,000 on 31 December 20X7. On 31 March 20X8, the building has a fair value of $46,310,000. Prepare the journal entry for the change in fair value
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A company has an office tower that is classified as an investment property under IFRS. The building had a fair value of $46,200,000 on 31 December 20X7. On 31 March 20X8, the building has a fair value of $46,310,000.
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- Petes Petroleum, Inc., an SEC registrant with a calendar year-end, is in the business of constructing and operating offs] lore oil platforms. Petes Petroleum is required legally to dismantle and remove the platforms at the end of their useful lives, which is estimated to be 10 years. On January 1, 2019, Pete constructed and began operating an offshore oil platform off the coast of Brazil. The total capitalized cost to construct the platform was 3,700,000. In addition, while the future cost of dismantling the oil platform is difficult to estimate, Pete believes there is a 40% chance that the future cost will be 1,425,000, a 40% chance it will be 1,650,000, and a 20% chance that it will cost 2,125,000. The appropriate discount rate is 12%, and Pete uses the straight-line method of depreciation. Required: 1. Prepare the journal entries that Pete should record in 2019 related to the oil platform. 2. Prepare an amortization schedule for the asset retirement obligation. 3. Next Level Prepare a table showing the effect of accounting for the asset retirement obligation on assets, liabilities, shareholders equity, and net income relative to accounting for the associated costs at the end of the assets service life when the expenditure is made.On January 1, 20x1, ABC Co. decided to lease out a building that was previously used as office space. The building has a historical cost of P 5,000,000 and accumulated depreciation of P 4,000,000. ABC Co. uses the fair value model for its investment property. The building has a fair value of P 800,000 on January 1, 20x1. What amount shall be recognized in the statement of financial performance on January 1, 20x1?9. RST Company acquired a building on January 1, 2021, for P25,000,000. At that date, the building has a useful life of 50 years. The fair value of the building was P28,000,000 on December 31, 2021. The building was appropriately classified as investment property and RST is using the fair value model in accounting the investment property. What amount shall be used in the statement of financial position on December 31, 2021?
- 1) On January 1, 2020, Harbor Company purchased land and building at a single cost of P20,000,000. On this date, it was determined that the land and building had a fair value of P18,000,000 and P7,000,000 respectively. The entity also incurred legal fees for purchase contract and recording ownership P200,000, and title guarantee insurance P100,000. The entity immediately demolished the building to make way for construction of a new building to be used as owner-occupied. The total contract price and other directly attributable cost to the building amounted to P15,000,000. The entity incurred demolition cost of P350,000. What is the initial cost of the land?Under IFRS 15, assuming the outcome of construction can be estimated reliably, what is the realized gross loss to be recognized by MDC for the year ended December 31, 20x22? On July 1, 20x31, Torela Company, a construction company, entered into a contract to construct a commercial building for a customer on customer-owned land for promised consideration of P1,000,000 and a bonus of P200,000 if the building is completed within 24 months. An inception date, the entity expects total construction costs of P700,000 to complete the building. The entity accounts for the promised bundle of goods and services as a single performance obligation satisfied over time in accordance with paragraph IFRS 15 because the customer controls the building during construction. At contract inception, the entity cannot conclude that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur with respect to inclusion of bonus to contract price. Completion…Bili Company acquired a building on January 1, 2019 for P 9,000,000. At that date the building had a useful life of 30 years. On December 31, 2019, the fair value of the building was P 9,600,000 and on December 31, 2020, the fair value is P 9,800,000. The building was classified as an investment property and accounted for under the cost model. What amount should be carried in the statement of financial position for the year ended 2020?. 8,700,000 8,400,000 9,000,000 9,800,000
- Tox Inc, acquired a building on January 1, 2021 for P20,000,000. At that date, the building had an estimated useful life of 40 years. The building was appropriately classified as investment property and accounted for using the fair value model. Tox uses straight-line method to depreciate its property, plant and equipment. The fair value of the building was P23,000,000 on December 31, 2021. What amount shall be presented in the statement of financial position at December 31, 2021 as investment property and recognized in profit or loss for the year 2021 respectively?Ingrid company acquired a building on January 1, 2017 for P4,500,000. At that date the building had a useful life of 30 years. On December 31, 2017 the fair value of the building was P4,800,000 and on December 31, 2018, the fair value is P4,900,000. The building was classified as an investment property and accounted for under the cost model. What amount should be carried in the statement of financial position as investment property?Han, Inc. owns a building purchased on January 1, 2016 for P100 million. The building was used as the company’s head office. The building has an estimated useful life of 25 years. In 2020, the company transferred its head office and decided to lease out the old building. Tenants began occupying the old building by the end of 2020. On December 31, 2020, the company reclassified the building as investment property to be carried at fair value. The fair value on the date of reclassification was P70 million. How much should be recognized in the 2020 profit or loss as a result of the transfer from owner-occupied to investment property?
- lab Company’s accounting policy with respect to investment properties is to measure them at fair value at the end of each reporting period. One of its investment properties was measured at P8,000,000 on December 31, 2020.The property had been acquired on January 1, 2020 for a total of P7,600,000, made up of P6,900,000 paid to the vendor. P300,000 paid to the local authority as a property transfer tax and P400,000 paid to professional advisers. The useful life of the property is 40 years. What is the gain to be recognized in profit or loss for the year ended December 31, 2020 in respect of the investment property? * P400,000 P590,000 P700,000 P800,000 answer not givenOn January 1, 20x1, ABC Co. decided to lease out a building that was previously used as office space. The building has a historical cost of P 5,000,000 and accumulated depreciation of P 4,000,000. 1. ABC Co. uses the cost model for both of its investment property and PPE. The building has a fair value of P 1,400,000 on January 1, 20x1. The journal entries revealed a credit to Building at _________on January 1, 20x1.Jutawan Bhd Bhd had used an office building for administrative purposes with a depreciated cost of historical cost of RM3.6 million on 1 April 2019 with a remaining life of 20 years. There were some reorganizations to Harta’s properties during the year of 2019. The office building was rented to a third party and reclassified as an investment property applying the fair value on 1 October 2019. Jutawan Bhd had consulted an independent professional assessor valued on the property. The fair value of the building was valued at RM4.14 million at 1 October 2019 by the assessor. This value rose further to RM4.212 million at 31 March 2020. Required: Discuss the accounting treatment of the above scenario in accordance to the relevant MFRS. Show the effects to the financial statements of Jutawan Bhd’s land and office building. (12 marks) (CLO1:PLO1:C6)
