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Prepare the necessary journal entries

Prepare the necessary journal entries

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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Sandhill 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. Sandhill 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 $58 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 The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $12 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. 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.) te 2024 $58 million $66 million $70 million $65 million 2025 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 Credit 00000
Transcribed Image Text:Sandhill 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. Sandhill 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 $58 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 The independent appraiser felt that the useful life of the shopping mall was 20 years and its residual value was $12 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. 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.) te 2024 $58 million $66 million $70 million $65 million 2025 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 Credit 00000
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