On January 1, 2021, an entity purchased a building to be leased to a 3rd party. The cost of the building was Rp320 million. The entity estimates the useful life of the buildings is 20 years (straight-line method) and the residual value of Rp20 million. The fair value of the building as of December 31, 2021 was Rp325 million. On July 1, 2022, the entity decided to use the building for its own office building. On that date, the fair value of the building was Rp300 million. If the entity uses cost model for its investment property and building, the carrying amount of building immediately after the transfer on July 1, 2022 will be O a. Rp320 million. O b. Rp305 million. O c. Rp297,500,000. O d. Rp300 million.
On January 1, 2021, an entity purchased a building to be leased to a 3rd party. The cost of the building was Rp320 million. The entity estimates the useful life of the buildings is 20 years (straight-line method) and the residual value of Rp20 million. The fair value of the building as of December 31, 2021 was Rp325 million. On July 1, 2022, the entity decided to use the building for its own office building. On that date, the fair value of the building was Rp300 million. If the entity uses cost model for its investment property and building, the carrying amount of building immediately after the transfer on July 1, 2022 will be O a. Rp320 million. O b. Rp305 million. O c. Rp297,500,000. O d. Rp300 million.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 6RE
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Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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