8. Brown Company uses fair value model for its investment property. At December 31, 2021, the company has the following property items. Acquisition cost/Carrying Fair value at Property item value 12/31/21 Land held for future plant site Land held for a currently undetermined future use Land and building acquired under finance lease being used in operations. Building (30% of the space is owner occupied and the remainder is being leased to others under operating leases. Building being leased out under finance lease. Building being used by the company for its operations Building being leased out under operating lease Equipment being leased out under operating lease 10,000,000 5,000,000 12,500,000 6,500,000 14,000,000 15,000,000 12,000,000 10,000,000 8,500,000 9,000,000 7,900,000 8,500,000 6,500,000 7,000,000 1,700,000 2,200,000

8. Brown Company uses fair value model for its investment property. At December 31, 2021, the company has the following property items. Acquisition cost/Carrying Fair value at Property item value 12/31/21 Land held for future plant site Land held for a currently undetermined future use Land and building acquired under finance lease being used in operations. Building (30% of the space is owner occupied and the remainder is being leased to others under operating leases. Building being leased out under finance lease. Building being used by the company for its operations Building being leased out under operating lease Equipment being leased out under operating lease 10,000,000 5,000,000 12,500,000 6,500,000 14,000,000 15,000,000 12,000,000 10,000,000 8,500,000 9,000,000 7,900,000 8,500,000 6,500,000 7,000,000 1,700,000 2,200,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 75BPSB

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You Company owns land and building classified as investment property . The land and building is being leased out under operating leases. The company uses the fair value model for all its other investment property. Data relating to the land and building follows: Cost FV Dec. 31, 2020 FV Dec. 31, 2021Land -------- P 10,000,000 ----- P14,000,000 -------P15,500,000Building ----- 20,000,000 ------ 9,000,000 -------- 8,500,000 On December 31, 2021, the company decided to use the land and building for its operations. At what amount should the land and building be recorded on December 31, 2021?
Sisig Corp. has the following information in its notes to the financial statements:• Land held for long term capital appreciation- P1,000,000• Land held for a currently determined future use- P300,000• Property that is being constructed or developed for future use as an investment property- P1,500,000• Investment property being redeveloped- P2,000,000• Building owned and leased out under operating lease- P450,000• Owner-occupied property- P3,200,000• Owner-managed hotel- P2,300,000How much is the Investment Property to be presented in the statement of financial position? A. P4,950,000 B. P7,250,000 C. P2,500,000 D. P4,500,000
37. Iron Company has the following property items at December 31, 2021: Particulars / Acquisition (CV) / FV 12/31/21 Land which at the date of acquisition is not intended for any specific use in the future - P1,000,000 / P1,800,000 Land held for future plant site - 2,000,000 / 2,600,000 Building in process of construction intended to be leased under operating lease - 8,000,000 / 8,000,000 Building being used by the entity for its operations - 2,5000,000 / 3,000,000 Equipment being leased under operating lease - 1,500,000 / 1,050,000 Land and Building acquired under finance leases being used by the entity as its general and administrative headquarter - 9,200,000 / 9,900,000 Assuming that the company adopted IAS 40, Investment Property using the Fair value model, what is the correct total of the investment property reported at December 31, 2021? P1,800,000 P9,800,000 P10,850,000 P19,700,000
Dayanara Company owns three properties which are classified as investment properties. Details of the properties are as follows: Initial Cost Fair Value 12/31/2019 Fair Value 12/31/2020 Property 1 2,700,000 3,200,000 3,500,000 Property 2 3,450,000 3,000,000 2,280,000 Property 3 3,300,000 3,900,000 3,400,000 Each property had an estimated useful life of 25 years. The entity’s accounting policy is to use the fair value model for investment properties. What is the carrying value of the investment properties that should be presented for the year ended December 31,2020 in the statement of financial position?
On January 1, 2020, HOWLSCo. acquired an investment property at a total cost of P25,000,000. At December 31, 2020, the carrying value of the property in the company’s books is P30,000,000. On December 31, 2020, HOWLSdecided to use the property and immediately reclassified it as plant asset. 1.What would be the initial cost of the plant asset if it has a fair value of P2,000,000 at the date of conversion? 2.What amount of revaluation surplus should HOWLSrecognize at the time of conversion?
Investment PropertyDEF Company owns land and building being used for its operations and administrative functions. The land and building are carried in its books using the cost model and have the following data at January 1,2023.Land:Cost - P10,000,000Fair value - 14,000,000Building:Cost -P20,000,000Accumulated depreciation -13,500,000Fair value - 9,000,000On this date, the company vacated the old building and occupied a newly constructed one located in the commercial area of the Central Business District. The old building is then reclassified as investment property using the fair value model. The company uses the fair value model in all of its other investment property.What is the amount of fair value gain reported in profit/loss resulting from the reclassification from owner occupied to investments property due to change in use of the property? a. P0 b. P2,500,000 c. P4,000,000 d. P6,500,000
Investment Property: Recognition: The following are being considered for classification under Investment Property by ABC Retailer Incorporated. Which should be included and what is correct balance for the account? a. Land held for undetermined use – P 4,000,000 b. Manufacturing plant – P 5,000,000 c. Vehicles rented out for additional income – P 3,000,000 d. Land plus building under construction to be rented out under an operating lease – P6,000,000 e. Investment Property, balance
5. During the period, Entity A, government entity, decides to use as an office one of its building that has previously been leased out under various operating leases on commercial basis. Information on the investment property is as follows: Investment property – Building Accumulated depreciation P1,000,000 800,000 At the date of change in use, the fair value of the investment property is P250,000. How much is the gain (loss) on the transfer? a. 50,000 b. (50,000) c. 0 d. A transfer is prohibited. eparing your question to be sent to tutors.
Hazel Company owns three properties which are classified as investment properties. Details of the properties are as follows: Initial Cost FMV at 12.31.2019 FMV at 12.31.2020 Property 1 2,700,000 3,200,000 3,500,000 Property 2 Property 3 3,450,000 3,000,000 2,800,000 3,300,000 3,900,000 3,400,000 Each property was acquired in 2015 with a useful life of 50 years. The entity's accounting policy is to use the fair value model for investment properties. What is the gain or loss to be recognized in profit or loss for the year ended December 31, 2020?
PT Adista owns land that was purchased in cash on January 2, 2018 at a cost of IDR 1,000,000,000. Requested: a. PT Adista decided to use the revaluation model for the land (which is a fixed asset). On December 31, 2018, the company recognized a revaluation surplus of the land amounting to Rp 100,000,000. If on December 31, 2019 it is known that the fair value of the land is IDR 1,060,000,000, make a journal entry that is recorded by PT Astina regarding the land in 2019. b. Describe how the accounting treatment differs between the fixed asset revaluation model and the fair value model of investment property.
1. An entity acquired a building for the purpose of leasing it on Jan 1, 2021 for P50 M. At that date the building had a useful life of 40 years. At Dec 31, 2021 the fair value of the building was P51 M. If the entity chooses the fair value model, the entity should * a.recognize depreciation of P1.25 M in its 2021 profit or loss b.recognize the building in its Dec 31, 2021 financial position statement at P48.75 M c.recognize gain of P1 M in its 2021 profit or loss d.none of the above