Don Camilo Company, a real estate entity, had a building in Legarda Rd. with a carrying amount of P20,000,000 on December 31, 2021. The building was used as offices of the entity's administrative staff. On December 31, 2021, the entity intended to rent out the building to independent third parties. The staff will be moved to their new office building in Session Road purchased early in 2021. On December 31, 2021, the original building had a fair value of P35,000,000. The usoful life of the building is 10 yoars, and the residual value is 2,500,000. On December 31, 2021, the entity also had a vacant lot that was used as a parking area. It was held for sale in the ordinary course of business. The land had a carrying amount of P10.000,000 and fair value of P15,000.000 on December 31,2021. On such date, the entity decided to hold the land for capital appreciation. The accounting policy is to carry all investment property at fair value On December 31, 2021, what amount should be recognized in revaluation surplus as a result of transfer of the building to investment property?
Don Camilo Company, a real estate entity, had a building in Legarda Rd. with a carrying amount of P20,000,000 on December 31, 2021. The building was used as offices of the entity's administrative staff. On December 31, 2021, the entity intended to rent out the building to independent third parties. The staff will be moved to their new office building in Session Road purchased early in 2021. On December 31, 2021, the original building had a fair value of P35,000,000. The usoful life of the building is 10 yoars, and the residual value is 2,500,000. On December 31, 2021, the entity also had a vacant lot that was used as a parking area. It was held for sale in the ordinary course of business. The land had a carrying amount of P10.000,000 and fair value of P15,000.000 on December 31,2021. On such date, the entity decided to hold the land for capital appreciation. The accounting policy is to carry all investment property at fair value On December 31, 2021, what amount should be recognized in revaluation surplus as a result of transfer of the building to investment property?
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 55P
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Transcribed Image Text:Don Camilo Company, a real estate entity, had a building in Legarda Rd. with a carrying amount of
P20,000,000 on December 31, 2021. The building was used as offices of the entity's administrative staff.
On December 31, 2021, the entity intended to rent out the building to independent third parties. The staff
will be moved to their new office building in Session Road purchased early in 2021. On December 31,
2021, the original building had a fair valuo of P35,000,000. The usoful lifo of the building is 10 yoars, and
the residual value is 2,500,000. On December 31, 2021, the entity also had a vacant lot that was used
as a parking area It was held for sale in the ordinary course of business. The land had a carrying amount
of P10,000,000 and fair value of P15,000,000 on December 31,2021. On such date, the entity decided
to hold the land for capital appreciation. The accounting policy is to carry all investment property at fair
value On December 31, 2021, what amount should he recognized in revaluation surplus as a result of
transfer of the building to investment property?
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