.2)KK Limited owns a property that is used as its head office in Pretoria. On 1 st January 2020, its carrying value was R20 million and its remaining useful life was 20 years. On 1st July 2020, the business recognized cheaper premises found for use as the head office. It was therefore decided to lease the property under an operating lease. The property was valued by a qualified professional who assessed the property’s value as R21 million on 1st July and R21.6 million on 31st December 2020. Explain the accounting treatment of the property in the financial statements for the year ended 31st December 2020. (Hint: Income statement)
.2)KK Limited owns a property that is used as its head office in Pretoria. On 1 st January 2020, its carrying value was R20 million and its remaining useful life was 20 years. On 1st July 2020, the business recognized cheaper premises found for use as the head office. It was therefore decided to lease the property under an operating lease. The property was valued by a qualified professional who assessed the property’s value as R21 million on 1st July and R21.6 million on 31st December 2020. Explain the accounting treatment of the property in the financial statements for the year ended 31st December 2020. (Hint: Income statement)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1.2)KK Limited owns a property that is used as its head office in Pretoria. On 1
st January 2020, its
carrying value was R20 million and its remaining useful life was 20 years. On 1st July 2020, the
business recognized cheaper premises found for use as the head office. It was therefore decided
to lease the property under an operating lease. The property was valued by a qualified
professional who assessed the property’s value as R21 million on 1st July and R21.6 million on
31st December 2020. Explain the accounting treatment of the property in the financial
statements for the year ended 31st December 2020. (Hint: Income statement)
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