Required: • Explain how B Ltd should classify Alphablock in the financial statements up until 1 October 2021 and how, if at all, this would change thereafter. • As part of your explanation, state at what value Alphablock should be reflected in the financial statements at both 1 October 2021 and thereafter
B Ltd owns various apartment blocks as investment property in terms of IAS 40 – Investment
property. On 1 October 2021, B Ltd decided to sell one of its commercial properties - AlphaBlock.
This property had a fair value of R15 million and was reflected as such in the financial statements
dated 31 December 2020. The fair value on 1 October 2021 was R17.5million. The directors had
decided to redevelop the Alphablock before selling it. B Ltd measures all investment property
using the fair value method.
Required:
• Explain how B Ltd should classify Alphablock in the financial statements up until 1 October
2021 and how, if at all, this would change thereafter.
• As part of your explanation, state at what value Alphablock should be reflected in the
financial statements at both 1 October 2021 and thereafter
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