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Preciou

FINANCIAL ACCOUNTING
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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3-2. Precious Realty Corporation owns and holds several property items that are held for sale as subdivided lots, condominiums and row houses. In addition, it also owns the Rainbow Building, which it is leasing to tenants under operating leases. In July 2021, because of planned expansion for year 2022, the company served notices to the Rainbow Building tenants for the termination of lease contracts on the facilities. On January 2, 2022, the Rainbow Building, which at that date had a carrying value of P4,000,000, (with cost of P8,200,000) was occupied by the company to carry out its sale and administrative activities. The corporation records annual depreciation of P200,000 on the Rainbow Building. REQUIRED: Prepare the necessary entries in 2022 as a result of the foregoing. The company carries its investment property and its property, plant and equipment using the cost model.
Transcribed Image Text:3-2. Precious Realty Corporation owns and holds several property items that are held for sale as subdivided lots, condominiums and row houses. In addition, it also owns the Rainbow Building, which it is leasing to tenants under operating leases. In July 2021, because of planned expansion for year 2022, the company served notices to the Rainbow Building tenants for the termination of lease contracts on the facilities. On January 2, 2022, the Rainbow Building, which at that date had a carrying value of P4,000,000, (with cost of P8,200,000) was occupied by the company to carry out its sale and administrative activities. The corporation records annual depreciation of P200,000 on the Rainbow Building. REQUIRED: Prepare the necessary entries in 2022 as a result of the foregoing. The company carries its investment property and its property, plant and equipment using the cost model.
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