Property 2 This property was acquired in 2010 and up to 31 May 2019 was fully let to a third party. Rentals earned from the beginning of the year up to this date were R375 000. At 1 January 2019 the property was carried at its fair value of R2 800 000. On the 31 May 2019 the current lease expired, and the company decided to use the property as its head office. It was occupied as such from 1 June 2019. The fair value of the property on 31 May 2019 was R2 600 000. On this date the remaining useful life of the property was expected to be 20 years. It is depreciated on a straightline basis with a NIL residual value. Q.2.3 Calculate the carrying value for Property 2 at the year‐end date, 31 December 2019, taking into account its transfer from investment property to owner‐occupied property during the course of the year. Q.2.4 Q.2.4.1 Entities hold tangible fixed assets for the purposes of consumption or own use. Investment property, however, is held by an entity for reasons other than this. What are the two most important reasons for a company to hold an investment property? Q.2.4.2 Give two examples of investment property.
Property 2
This property was acquired in 2010 and up to 31 May 2019 was fully let to a third party. Rentals
earned from the beginning of the year up to this date were R375 000. At 1 January 2019 the
property was carried at its fair value of R2 800 000. On the 31 May 2019 the current lease expired,
and the company decided to use the property as its head office. It was occupied as such from 1
June 2019. The fair value of the property on 31 May 2019 was R2 600 000. On this date the
remaining useful life of the property was expected to be 20 years. It is
basis with a NIL residual value.
Q.2.3 Calculate the carrying value for Property 2 at the year‐end date, 31 December 2019, taking into account its transfer from investment property to owner‐occupied property during the course of the year.
Q.2.4
Q.2.4.1 Entities hold tangible fixed assets for the purposes of consumption
or own use. Investment property, however, is held by an entity for
reasons other than this. What are the two most important reasons for a company to hold an investment property?
Q.2.4.2 Give two examples of investment property.
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