2. ABC Ltd acquired a property on 1 January 2004 at a cost of 4 GH¢00,000 and immediately occupied it as office premise. On acquisition, it was estimated to have a useful life of 50 years. Subsequent to its acquisition, the asset was measured at depreciated cost until 1 October 2009 when management of ABC decided to convert the building into an investment property (mainly for rentals). Following this decision, the property was fair valued at GH¢380,000. ABC adopted the fair value model for subsequent measurement of the investment property. At 31 December 2009, it was fair valued at GH¢390,000.
2. ABC Ltd acquired a property on 1 January 2004 at a cost of 4 GH¢00,000 and immediately occupied it as office premise. On acquisition, it was estimated to have a useful life of 50 years. Subsequent to its acquisition, the asset was measured at depreciated cost until 1 October 2009 when management of ABC decided to convert the building into an investment property (mainly for rentals). Following this decision, the property was fair valued at GH¢380,000. ABC adopted the fair value model for subsequent measurement of the investment property. At 31 December 2009, it was fair valued at GH¢390,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
a. Required:
In accordance with IAS 40: Investment property, account for the treatment of this property in 2009 financial statements of ABC ltd.
Transcribed Image Text:2. ABC Ltd acquired a property on 1 January 2004 at a cost of 4 GH¢00,000 and immediately
occupied it as office premise. On acquisition, it was estimated to have a useful life of 50 years.
Subsequent to its acquisition, the asset was measured at depreciated cost until 1 October 2009
when management of ABC decided to convert the building into an investment property (mainly
for rentals). Following this decision, the property was fair valued at GH¢380,000. ABC
adopted the fair value model for subsequent measurement of the investment property. At 31
December 2009, it was fair valued at GH¢390,000.
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