Love Company owns a building purchased on January 1, 2018 for P50 million. The building was used as the company’s head office. The building has an estimated useful life of 25 years. In 2022, the company transferred its head office and decided to lease out the old building. Tenants began occupying the old building. On December 31,2022, the company reclassified the building as investment property to be carried at fair value. The fair value on the date of reclassification was P42 million.
Love Company owns a building purchased on January 1, 2018 for P50 million. The building was used as the company’s head office. The building has an estimated useful life of 25 years. In 2022, the company transferred its head office and decided to lease out the old building. Tenants began occupying the old building. On December 31,2022, the company reclassified the building as investment property to be carried at fair value. The fair value on the date of reclassification was P42 million.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Love Company owns a building purchased on January 1, 2018 for P50 million. The building was used as the company’s head office. The building has an estimated useful life of 25 years. In 2022, the company transferred its head office and decided to lease out the old building. Tenants began occupying the old building. On December 31,2022, the company reclassified the building as investment property to be carried at fair value. The fair value on the date of reclassification was P42 million.
How much should be recognized in the 2022 profit or loss as a result of the transfer from owner -occupied to investment property?
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