On January 1, 20x8, Pares Company classified its property interest under an operating lease from Allan Company, the lessor, as an investment property. The asset was recognized at P 8M with an estimated remaining useful life of 15 years. The fair value of such asset is P 8.1M on December 31, 20x8. Pares adopts the cost model in valuing its investment properties subsequent to initial recognition. The investment property account of Pares, excluding the transaction described above, is composed of the following:AssetCV 1/1/x8Remaining Useful LifeFV 12/31/x8A4.5MNA5MB6.55M164.89MC10.6M2011.050M If Pares uses the straight-line method in computing for depreciation expense, how much is the net amount of investment property to be reported in the December 31, 20x8 statement of financial position?

Investment Properties are properties purchased to generate returns from it either in the form of…

Answered: x8, Pares Company classified its…

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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On January 1, 20x8, Pares Company classified its property interest under an operating lease from Allan Company, the lessor, as an investment property. The asset was recognized at P 8M with an estimated remaining useful life of 15 years. The fair value of such asset is P 8.1M on December 31, 20x8. Pares adopts the cost model in valuing its investment properties subsequent to initial recognition. The investment property account of Pares, excluding the transaction described above, is composed of the following:

Asset	CV 1/1/x8	Remaining Useful Life	FV 12/31/x8
A	4.5M	NA	5M
B	6.55M	16	4.89M
C	10.6M	20	11.050M

If Pares uses the straight-line method in computing for depreciation expense, how much is the net amount of investment property to be reported in the December 31, 20x8 statement of financial position?

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