GGG Company ventured into construction of a condominium in Baguio which is rated as the largest state-of-the-art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by letting out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2019. The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following hair value at each subsequent year-end: December 31, 2019 - 55,000,000; December 31, 2020 = 53,000,000; December 31, 2021 = 60,000,000. Under fair value model, what amount should be recognized as gain from change in fair value in 2019?
GGG Company ventured into construction of a condominium in Baguio which is rated as the largest state-of-the-art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by letting out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2019. The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following hair value at each subsequent year-end: December 31, 2019 - 55,000,000; December 31, 2020 = 53,000,000; December 31, 2021 = 60,000,000. Under fair value model, what amount should be recognized as gain from change in fair value in 2019?
Chapter12: Nonrecognition Transactions
Section: Chapter Questions
Problem 30P
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Transcribed Image Text:GGG Company ventured into construction of a condominium in Baguio which is rated as the
largest state-of-the-art structure. The board of directors decided that instead of selling the
condominium, the entity would hold this property for purposes of earning rentals by letting
out space to business executives in the area. The construction of the condominium was
completed and the property was placed in service on January 1, 2019. The cost of the
construction was P50,000,000. The useful life of the condominium is 25 years and the residual
value is P5,000,000. An independent valuation expert provided the following hair value at each
subsequent year-end: December 31, 2019 = 55,000,000; December 31, 2020 = 53,000,000;
December 31, 2021 = 60,000,000. Under fair value model, what amount should be recognized
as gain from change in fair value in 2019?
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