b. Courage Hodey Inc. owns the following properties as at 31 December 2019: Property: Land with...
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b. Courage Hodey Inc. owns the following properties as at 31 December 2019: Property: Land with future use undetermined Factory rented to Courage Hodey's subsidiary under an operating lease 10 floor office building (fair value is equal per floor) Fair value (GHe million) 3.2 2.4 with 3 floors used as the subsidiary's head office and seven floors rented to third parties under an operating lease. Empty building held for capital appreciation, but not leased out. 15.0 4.1 Courage Hodey's accounting policy is to hold its investment properties under the fair value model and its land and buildings under the revaluation model. Required: In accordance with IAS 40 Investment Property calculate the carrying amount to be recognised as investment property in Courage Hodey's consolidated financial statements as at 31 December 2019. 3 marks c. IAS 23 Borrowing Costs requires that borrowing costs directly attributable to the acquisition, construction or production of a 'qualifying asset' (one that necessarily takes a substantial period of time to get ready for its intended use or sale) are to be capitalised or included in the cost of the asset once they meet certain conditions. Required: Identify THREE conditions that must be met before an entity can commence to capitalise borrowing cost. 3 marks d. Polycarp Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of Polycarp is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH 45,000. It was revalued to GH54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH¢ 32,000. Required: Discuss the accounting treatment required in 2018 and 2019 financial statements. 3 marks e. E. Adentwi Enterprises Ltd bought a machine for GHC 150,000 on 1st January 2019. It depreciates the machine on cost over four years assuming a nil residual value. The company received a grant of GHC30,000 from the municipal assembly to support the acquisition of the machines. Account for this grant under the netting off method. 3 marks b. Courage Hodey Inc. owns the following properties as at 31 December 2019: Property: Land with future use undetermined Factory rented to Courage Hodey's subsidiary under an operating lease 10 floor office building (fair value is equal per floor) Fair value (GHe million) 3.2 2.4 with 3 floors used as the subsidiary's head office and seven floors rented to third parties under an operating lease. Empty building held for capital appreciation, but not leased out. 15.0 4.1 Courage Hodey's accounting policy is to hold its investment properties under the fair value model and its land and buildings under the revaluation model. Required: In accordance with IAS 40 Investment Property calculate the carrying amount to be recognised as investment property in Courage Hodey's consolidated financial statements as at 31 December 2019. 3 marks c. IAS 23 Borrowing Costs requires that borrowing costs directly attributable to the acquisition, construction or production of a 'qualifying asset' (one that necessarily takes a substantial period of time to get ready for its intended use or sale) are to be capitalised or included in the cost of the asset once they meet certain conditions. Required: Identify THREE conditions that must be met before an entity can commence to capitalise borrowing cost. 3 marks d. Polycarp Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of Polycarp is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH 45,000. It was revalued to GH54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH¢ 32,000. Required: Discuss the accounting treatment required in 2018 and 2019 financial statements. 3 marks e. E. Adentwi Enterprises Ltd bought a machine for GHC 150,000 on 1st January 2019. It depreciates the machine on cost over four years assuming a nil residual value. The company received a grant of GHC30,000 from the municipal assembly to support the acquisition of the machines. Account for this grant under the netting off method. 3 marks
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ANSWER IAS 40 Investment property Investment property is property land or building or both or part of it held by the owner or lessee to earn rentals o... View the full answer
Related Book For
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett
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