Cullumber Holdings Inc., a publicly listed company in Canada, ventured into construction of a mega-shopping mall in Edmonton, which is rated as the largest shopping mall in North America. The company's board of directors, after much market research, decided that instead of selling the shopping mall to a local investor who had approached them several times with excellent offers that he steadily increased during the year of construction, the company would hold this property for the purposes of capital appreciation and earning rental income from mall tenants. The construction of the mall ended on December 31, 2019. Cullumber Holdings retained the services of a real estate company to find and attract many important retailers to rent space in the shopping mall. The shopping mall was fully occupied soon after construction was completed. According to the company's accounting department, the total construction cost of the shopping mall was $52 million. The company used an independent appraiser to determine the mall's fair value annually. According to the appraisal, the fair values of the shopping mall at December 31, 2020, and at each subsequent year end were: 2020 $52 million 2021 $61 million 2022 $65 million 2023 $59 million The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $11 million. Note that the mall's rental income and expenses would be the same and thus can be omitted from the analysis for this exercise. Prepare the necessary journal entries for 2021, 2022, and 2023 if it decides to treat the shopping mall as an investment property under IAS 40: Use fair value model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record
Cullumber Holdings Inc., a publicly listed company in Canada, ventured into construction of a mega-shopping mall in Edmonton, which is rated as the largest shopping mall in North America. The company's board of directors, after much market research, decided that instead of selling the shopping mall to a local investor who had approached them several times with excellent offers that he steadily increased during the year of construction, the company would hold this property for the purposes of capital appreciation and earning rental income from mall tenants. The construction of the mall ended on December 31, 2019. Cullumber Holdings retained the services of a real estate company to find and attract many important retailers to rent space in the shopping mall. The shopping mall was fully occupied soon after construction was completed. According to the company's accounting department, the total construction cost of the shopping mall was $52 million. The company used an independent appraiser to determine the mall's fair value annually. According to the appraisal, the fair values of the shopping mall at December 31, 2020, and at each subsequent year end were: 2020 $52 million 2021 $61 million 2022 $65 million 2023 $59 million The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $11 million. Note that the mall's rental income and expenses would be the same and thus can be omitted from the analysis for this exercise. Prepare the necessary journal entries for 2021, 2022, and 2023 if it decides to treat the shopping mall as an investment property under IAS 40: Use fair value model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject: acounting
Transcribed Image Text:Question 4
Cullumber Holdings Inc., a publicly listed company in Canada, ventured into construction of a mega-shopping mall in Edmonton, which is rated as the largest shopping mall in North America. The
company's board of directors, after much market research, decided that instead of selling the shopping mall to a local investor who had approached them several times with excellent offers that he
steadily increased during the year of construction, the company would hold this property for the purposes of capital appreciation and earning rental income from mall tenants. The construction of the
mall ended on December 31, 2019. Cullumber Holdings retained the services of a real estate company to find and attract many important retailers to rent space in the shopping mall. The shopping
mall was fully occupied soon after construction was completed.
According to the company's accounting department, the total construction cost of the shopping mall was $52 million. The company used an independent appraiser to determine the mall's fair value
annually. According to the appraisal, the fair values of the shopping mall at December 31, 2020, and at each subsequent year end were:
2020 $52 million
2021 $61 million.
2022 $65 million
2023 $59 million
The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $11 million.
Note that the mall's rental income and expenses would be the same and thus can be omitted from the analysis for this exercise.
Prepare the necessary journal entries for 2021, 2022, and 2023 if it decides to treat the shopping mall as an investment property under IAS 40: Use fair value model. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record
journal entries in the order presented in the problem. Enter amounts in dollars instead of million dollars.)
Account Titles and Explanation
Debit
Credit
Date
✰
Transcribed Image Text:Prepare the necessary journal entries for 2021, 2022, and 2023 if it decides to treat the shopping mall as an investment property under IAS 40: Use the cost model. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record
journal entries in the order presented in the problem. Enter amounts in dollars instead of million dollars.)
Account Titles and Explanation
Date
↑
Debit
Credit
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 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