Rhino Company, a real estate entity, had a building with a The building was used as offices of the entity's administrative carrying ámount of P20,000,000 on December 31, 2021 The building was used as offices of the entity's administrative staff. On December 31, 2021, the entity intended to rent out the building to independent third parties. The staff will be moved to a new building purchased early in 2021. On December 31, 2021, the original building had a fair value of P35,000,000. On December 31, 2021, the entity also had land that was held for sale in the ordinary course of business. The land had a carrying amount of P10,000,000 and fair value of P15,000,000 on December 31, 2021. On such date, the entity decided to hold the land for capital appreciation. The accounting policy is to carry all investment property at fair value.

Rhino Company, a real estate entity, had a building with a The building was used as offices of the entity's administrative carrying ámount of P20,000,000 on December 31, 2021 The building was used as offices of the entity's administrative staff. On December 31, 2021, the entity intended to rent out the building to independent third parties. The staff will be moved to a new building purchased early in 2021. On December 31, 2021, the original building had a fair value of P35,000,000. On December 31, 2021, the entity also had land that was held for sale in the ordinary course of business. The land had a carrying amount of P10,000,000 and fair value of P15,000,000 on December 31, 2021. On such date, the entity decided to hold the land for capital appreciation. The accounting policy is to carry all investment property at fair value.

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

Rhino Company, a real estate entity, had a building with a
The building was used as offices of the entity's administrative
Problem 22-10 (IFRS)
a
carrying ámount of P20,000,000 on December 31, 2021
staff.
On December 31, 2021, the entity intended to rent out the
building to independent third parties. The staff will be moved
to a new building purchased early in 2021.
On December 31, 2021, the original building had a fair value
of P35,000,000.
On December 31, 2021, the entity also had land that was
held for sale in the ordinary course of business.
The land had a carrying amount of P10,000,000 and fair value
of P15,000,000 on December 31, 2021.
On such date, the entity decided to hold the land for capital
appreciation.
The accounting policy is to carry all investment property at
fair value.
1. On December 31, 2021, what amount should be recognized
in revaluation surplus as a result of transfer of the
building to investment property?
a, 20,000,000
b. 35,000,000
c. 15,000,000
d.
0.
2. On December 31, 2021, what amount should be recognized
in profit or loss as a result of transfer of the land to
investment property?
a. 15,000,000
b. 10,000,000
5,000,000
d.
c.

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