Int Acc 2019 Vol 2 Chap 3 Empleo Robles 3 5 corrected PDF

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CHAPTER 3INVESTMENT PROPERTYDiscussion Question No. 4The following shall be reported as Investment Property:(a), (b), (c), (e) , (g), (o), (r) and (s)(d) not shown in the financial statements (with Finance Lease Receivable) (f) Property, Plant and Equipment (h) Property, Plant and Equipment, until c...

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CHAPTER 3 INVESTMENT PROPERTY Discussion Question No. 4 The following shall be reported as Investment Property: (a), (b), (c), (e), (g), (o), (r) and (s) (d) (f) (h) (i) (j) (k) (l) (m) (n) (p) (q)

not shown in the financial statements (with Finance Lease Receivable) Property, Plant and Equipment Property, Plant and Equipment, until consummation of lease Inventories Inventories Construction in Progress (Inventories) Property, Plant and Equipment Property, Plant and Equipment Property, Plant and Equipment Property, Plant and Equipment classified as Property, Plant and Equipment, under IFRS 16, unless lease term is shorter than 12 months.

PROBLEMS 3-1.

(Sebastian Corporation) a.

b.

3-2.

Purchase price Commission to real estate agent Costs of clearing the land (net of timber and gravel recovered amounting to P65,000) Total cost . Down payment Market value of shares issued (20,000 x 240) Present value of non-interest bearing note issued (2,000,000 x 2.4869) Total cost of land and building Cost allocated to land (30% x 13,773,800) Cost allocated to building (70% x 13,773,800)

P 8,600,000 430,000 70,000 P 9,100,000 P 4,000,000 4,800,000 4,973,800 P13,773,800 P 4,132,140 P 9,641,660

(Precious Realty Corporation) 1/2/19

12/31/19

Buildings Accumulated Depreciation – Building Held as Investment Property Buildings Held as Investment Property Accumulated Depreciation - Buildings

8,200,000

Depreciation Expense – Buildings Accumulated Depreciation - Buildings

200,000

4,200,000 8,200,000 4,200,000 200,000

Chapter 3 – Investment Property

3-3.

(Pioneer Property Corporation) 7/1/19

Depreciation Expense – Rainbow Building Accumulated Depreciation – Rainbow Building

100,000 100,000

Investment Property – Rainbow Building Accumulated Depreciation – Rainbow Buildings Buildings – Rainbow Building Revaluation Surplus

5,000,000 4,300,000 8,200,000 1,100,000

July 1 3-4.

(Absolute Corporation) Cost Model (a) Investment Property at December 31, 2019 Land Building Cost Accumulated Depreciation 20,000,000/40 Total Investment Property (b)

P 5,000,000 P20,000,000 500,000

Accounts and Amounts Taken to Profit or Loss Rent Revenue Depreciation Expense Administrative and Security Salaries Property Taxes Maintenance Profit

P 3,000,000 (500,000) (200,000) (120,000) (340,000) P 1,840,000

Fair Value Model (a) Investment Property at December 31, 2019 Land Building Total Investment Property (b)

3-5.

19,500,000 P24,500,000

P 6,800,000 20,000,000 P26,800,000

Amounts and Accounts Taken to Profit or Loss Rent Revenue Change in Fair Value of Investment Property Land Building Administrative and Security Salaries Property Taxes Maintenance Profit

P3,000,000 800,000 1,000,000 (200,000) (120,000) (340,000) P4,140,000

(Adam Company) (a)

Cost Model Land Held as Investment Property Building Held as Investment Property Accum. Depr. – Building Land Building Accumulated Depreciation – Bldg Held as Investment Property

37

20.0M 50.0M 15.0M 20.0M 50.0M 15.0M

Chapter 3 – Investment Property

(b)

Fair Value Model Land Held as Investment Property Land Revaluation Surplus

28.0M

Building Held as Investment Property Accum. Depreciation-Building Building Accum. Depr. – Building Held as Investment Property Revaluation Surplus

60.0M 15.0M

20.0M 8.0M

50.0M 18.0M 7.0M

35M/50M = 70%; 42M/70% = 60M 60M – 42M = 18M; 42M – 35M = 7M 3-5.

(Accurate Company) Cost Model Sales price Carrying value Cost P2,500,000 Less Accum Depreciation 2,400,000/10 yrs = 240,000 240,000 x 4 1/3 yrs 1,040,000 Gain on sale

P2,200,000

1,460,000 P 740,000

Fair value Model Sales price Fair value at December 31, 2018 Loss on sale

3-6.

P2,200,000 2,300,000 P 100,000

(Conceptual Company) (a)

(b)

Amount reported in 2019 profit or loss Depreciation expense (5,800,000 – 400,000)/40 years

P 135,000

Cost Less Accumulated Depreciation (135,000 x 3.5 yrs) Carrying amount, December 31, 2019

P5,800,000 472,500 P5,327,500

MULTIPLE CHOICE QUESTIONS Theory MC1 MC2 MC3 MC4 MC5

C C A B B

MC6 MC7 MC8 MC9

C C A A

Problems MC10

B

Land for undetermined future use Vacant building to be leased out under operating lease Total investment property in the consolidated statement

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P10 million 20 million P30 million

Chapter 3 – Investment Property

MC11

A

Transfer is from owner-occupied property to investment property; excess of fair value over carrying amount (28M-20M and 35M30M) is credited to revaluation surplus.

P0

MC12

D

Fair value at time of transfer (20,000,000 – 15,000,000) Carrying value Amount taken to profit or loss

MC13

D

Carrying value (18,000,000 x 39/40) Depreciation expense (18,000,000/40 years)

P17,550,000 P 450,000

MC14

C

Fair value FV Gain (20,000,000 – 18,000,000)

P20,000,000 P 2,000,000

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P20 million 15 million P 5 million...