Problem 22-9 (IFRS) On January 1, 2021, Wee Company acquired property consisting of ten identical freehold detached houses each with separate legal title including the land on which it is built for P200,000,000, 20% of which is attributable to the land. The units have a useful life of 50 years. The following costs are also incurred on such date: Nonrefundable transfer taxes not included in the purchase price 20,000,000 Legal cost directly attributable to the acquisition 1,000,000 Reimbursement to the previous owner for prepaying nonrefundable property taxes for the six-month period ending June 30, 2021 100,000 Advertising campaign 500,000 Opening function to celebrate new rental business 200,000 On June 30, 2021, the entity paid local property taxes of P200,000 for the year ending June 30, 2022. Throughout 2021, the entity incurred repairs and maintenance of P120,000. The entity used one of the ten units to accommodate the administration and maintenance staff. The other nine units are rented out to independent parties under an operating lease. On December 31, 2021, the fair value of each unit was reliably estimated at P25,000,000. The fair value of the units can be measured reliably. The accounting policy is to use the fair value model fo: investment property.
Problem 22-9 (IFRS) On January 1, 2021, Wee Company acquired property consisting of ten identical freehold detached houses each with separate legal title including the land on which it is built for P200,000,000, 20% of which is attributable to the land. The units have a useful life of 50 years. The following costs are also incurred on such date: Nonrefundable transfer taxes not included in the purchase price 20,000,000 Legal cost directly attributable to the acquisition 1,000,000 Reimbursement to the previous owner for prepaying nonrefundable property taxes for the six-month period ending June 30, 2021 100,000 Advertising campaign 500,000 Opening function to celebrate new rental business 200,000 On June 30, 2021, the entity paid local property taxes of P200,000 for the year ending June 30, 2022. Throughout 2021, the entity incurred repairs and maintenance of P120,000. The entity used one of the ten units to accommodate the administration and maintenance staff. The other nine units are rented out to independent parties under an operating lease. On December 31, 2021, the fair value of each unit was reliably estimated at P25,000,000. The fair value of the units can be measured reliably. The accounting policy is to use the fair value model fo: investment property.
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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Transcribed Image Text:On January 1, 2021, Wee Company acquired property
consisting of ten identical freehold detached houses each
Problem 22-9 (IFRS)
with separate legal title including the land on which it is
built for P200,000,000, 20% of which is attributable to the
land. The units have a useful life of 50 years.
The following costs are also incurred on such date:
Nonrefundable transfer taxes not included
in the purchase price
20,000,000
Legal cost directly attributable to the acquisition
1,000,000
Reimbursement to the previous owner for
prepaying nonrefundable property taxes
for the six-month period ending June 30, 2021
100,000
Advertising campaign
500,000
Opening function to celebrate new rental business
200,000
On June 30, 2021, the entity paid local property taxes of
P200,000 for the year ending June 30, 2022.
Throughout 2021, the entity incurred repairs and
maintenance of P120,000.
The entity used one of the ten units to accommodate the
administration and maintenance staff.
The other nine units are rented out to independent parties
under an operating lease.
On December 31, 2021, the fair value of each unit was reliably
estimated at P25,000,000. The fair value of the units can be
measured reliably.
The accounting policy is to use the fair value model for
investment property.
Transcribed Image Text:1. What amount should be reported initially as investment
property?
a. 198,900,000
b. 198,000,000
c. 176,800,000
d. 180,000,000
2. What amount should be reported initially as land to be
accounted for as property, plant and equipment?
a. 4,400,000
b. 4,420,000
с. 4,000,000
d. 4,430,000'
3. What amount should be reported initially as building to
be accounted for as property, plant and equipment?
a. 17,690,000
b. 17,600,000
c. 17,680,000
d. 16,000,000
4. What amount should be reported as gain from the increase
in fair value of investment property for the current year?
a. 51,100,000
b. 27,000,000
c. 45,000,000
d. 26,100,000
5. What amount should be reported as depreciation of the
building for the current year?
a. 353,600
b. 320,000
c. 352,000
d. 353,800
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