Pharoah 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, 2022. Pharoah 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 $68 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, 2023, and at each subsequent year end were: 2023 $68 million $79 million $84 million $79 million 2024 2025 2026 The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $14 million. Note that the mall's rental income and expenses would be the same under both options, and thus can be omitted from the analysis for this exercise. (a) Your answer is partially correct. Prepare the necessary journal entries for 2024, 2025, and 2026 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 O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem. Enter amounts in dollars instead of million dollars.) Date Dec. 31, 2024 Dec. 31, 2025 Dec. 31, 2026 Account Titles and Explanation Investment Property Gain or Loss in Value of Investment Property Investment Property Gain or Loss in Value of Investment Property Gain or Loss in Value of Investment Property Investment Property Debit 10 Credit

Pharoah 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, 2022. Pharoah 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 $68 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, 2023, and at each subsequent year end were: 2023 $68 million $79 million $84 million $79 million 2024 2025 2026 The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $14 million. Note that the mall's rental income and expenses would be the same under both options, and thus can be omitted from the analysis for this exercise. (a) Your answer is partially correct. Prepare the necessary journal entries for 2024, 2025, and 2026 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 O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem. Enter amounts in dollars instead of million dollars.) Date Dec. 31, 2024 Dec. 31, 2025 Dec. 31, 2026 Account Titles and Explanation Investment Property Gain or Loss in Value of Investment Property Investment Property Gain or Loss in Value of Investment Property Gain or Loss in Value of Investment Property Investment Property Debit 10 Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

please choose from the following accounts:

Accounts Payable

Accumulated Depreciation - Buildings

Accumulated Depreciation - Equipment

Accumulated Depreciation - Leasehold Improvements

Accumulated Depreciation - Machinery

Accumulated Depreciation - Vehicle Overhaul

Accumulated Depreciation - Vehicles

Advertising Expense

Asset Retirement Obligation

Buildings

Cash

Common Shares

Contributed Surplus - Donated Capital

Cost of Goods Sold

Deferred Revenue - Government Grants

Depreciation Expense

Donation Revenue

Equipment

Finance Expense

Gain on Disposal of Buildings

Gain on Disposal of Equipment

Gain on Disposal of Machinery

Gain on Disposal of Vehicles

Gain on Vehicle Overhaul

Gain or Loss in Value of Investment Property

GST Receivable

Interest Expense

Interest Payable

Inventory

Investment Property

Land

Land Improvements

Legal Expense

Loss on Disposal of Buildings

Loss on Disposal of Equipment

Loss on Disposal of Machinery

Loss on Disposal of Vehicles

Loss on Vehicle Overhaul

Machinery

Mineral Resources

Mortgage Payable

No Entry

Notes Payable

Office Expense

Prepaid Expenses

Prepaid Insurance

Purchase Discounts

Repairs and Maintenance Expense

Revaluation Gain or Loss

Revaluation Surplus (AOCI)

Revaluation Surplus (OCI)

Revenue - Government Grants

Salaries and Wages Expense

Sales Revenue

Service Revenue

Supplies

Tenant Deposits Liability

Vehicle Overhaul

Vehicles

Pharoah 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, 2022. Pharoah 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 $68 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, 2023, and at each subsequent year end were:
2023
2024
2025
2026
$68 million
$79 million
$84 million
$79 million
The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $14 million.
Note that the mall's rental income and expenses would be the same under both options, and thus can be omitted from the analysis for
this exercise.
(a)
Your answer is partially correct.
Prepare the necessary journal entries for 2024, 2025, and 2026 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 O for the amounts. List all debit entries before credit
entries. Record journal entries in the order presented in the problem. Enter amounts in dollars instead of million dollars.)
Account Titles and Explanation
Date
Dec. 31, 2024
Dec. 31, 2025
Dec. 31, 2026
Investment Property
Gain or Loss in Value of Investment Property
Investment Property
Gain or Loss in Value of Investment Property
Gain or Loss in Value of Investment Property
Investment Property
Debit
Credit
10
ILUL

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