Assume there are three separate real estate companies: US Realty (which applies the cost model with straight-line depreciation), UK Realty (which applies the revaluation model), and Singapore Realty (which applies the fair value model). Assume that on January 1, 2020, each company pays $1,000 to obtain an investment property, comprised of the land of negligible value and a building worth $1,200 (fair value). The building has a 10-year useful life, no residual value, and the fair value of the property is close to its value-in-use. If the companies want to sell the property, the transaction cost is negligible. (Hint: Use the account ``Fair Value Gain/Loss on Investment Property’’ when applying the fair value model.) Instructions Prepare the journal entries for the following events and transactions. (1) Acquisition on January 1, 2020 (2) Fair value of the building is $1,300 on December 31, 2020 (3) Fair value of the building is $1,100 million on December 31, 2021 (4) Fair value of the building is $500 on December 31, 2022
Assume there are three separate real estate companies: US Realty (which applies the cost model with straight-line
Instructions Prepare the journal entries for the following events and transactions.
(1) Acquisition on January 1, 2020
(2) Fair value of the building is $1,300 on December 31, 2020
(3) Fair value of the building is $1,100 million on December 31, 2021
(4) Fair value of the building is $500 on December 31, 2022
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