Precious Realty Corporation owns and holds several property items that are held for sale as subdivided lots, condominiums and row houses. In addition, it also owns the Rainbow Building, which it is Jeasing to tenants under operating leases. In July 2018, because of planned expansion for year 2019, the company served notices to the Rainbow Building tenants for the termination of lease contracts on the facilities. On January 2, 2019, the Rainbow Building, which at that date had a carrying value of P4,000,000, (with cost of P8,200,000) was occupied by the company to carry out its sale and administrative activities. The corporation records annual depreciation of P200,000 on the Rainbow Building. REQUIRED: Prepare the necessary entries in 2019 as a result of the foregoing. The company carries its investment property and its property, plant and equipment using the cost model.

Precious Realty Corporation owns and holds several property items that are held for sale as subdivided lots, condominiums and row houses. In addition, it also owns the Rainbow Building, which it is Jeasing to tenants under operating leases. In July 2018, because of planned expansion for year 2019, the company served notices to the Rainbow Building tenants for the termination of lease contracts on the facilities. On January 2, 2019, the Rainbow Building, which at that date had a carrying value of P4,000,000, (with cost of P8,200,000) was occupied by the company to carry out its sale and administrative activities. The corporation records annual depreciation of P200,000 on the Rainbow Building. REQUIRED: Prepare the necessary entries in 2019 as a result of the foregoing. The company carries its investment property and its property, plant and equipment using the cost model.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges

Section: Chapter Questions

Problem 36P

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