22 On January 1, 2022, Estrime Company purchases an investment property at a cost of P50,000,000 including transaction costs. On October 1, 2022, the fair value of property increases to P51,000,000. At December 31, 2022 the fair value of property is P47,000,000. The rental income received per quarter is P1,550,000. The property has a useful life of 50 years. If the company uses the cost model, what is the net effect on the profit or loss for the year ended December 31, 2022 in relation to the investment property? If the company uses the fair value model, what is the net effect on the profit or loss for the six months ended December 31, 2022 in relation to the investment property?
22 On January 1, 2022, Estrime Company purchases an investment property at a cost of P50,000,000 including transaction costs. On October 1, 2022, the fair value of property increases to P51,000,000. At December 31, 2022 the fair value of property is P47,000,000. The rental income received per quarter is P1,550,000. The property has a useful life of 50 years. If the company uses the cost model, what is the net effect on the profit or loss for the year ended December 31, 2022 in relation to the investment property? If the company uses the fair value model, what is the net effect on the profit or loss for the six months ended December 31, 2022 in relation to the investment property?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
22
On January 1, 2022, Estrime Company purchases an investment property at a cost of P50,000,000 including transaction costs. On October 1, 2022, the fair value of property increases to P51,000,000. At December 31, 2022 the fair value of property is P47,000,000. The rental income received per quarter is P1,550,000. The property has a useful life of 50 years.
If the company uses the cost model, what is the net effect on the profit or loss for the year ended December 31, 2022 in relation to the investment property?
If the company uses the fair value model, what is the net effect on the profit or loss for the six months ended December 31, 2022 in relation to the investment property?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education