Golden Properties Corporation purchased a parcel of land in 2012 for $1 million with the intent to construct a building on the property in the near future. At the time of purchase, and in the subsequent financial statements for the years ended December 31, 2012, and 2013, Golden applied the cost model and measured and reported the land at its acquisition cost as allowed in IAS 16.
Golden follows IFRS. Management decided in early 2014 that the land qualifies as an investment property under IAS 40 and that Golden is to apply the fair value model of accounting for investment properties effective immediately because the company believes that changing the measurement model will provide more relevant information.
Independent appraisals indicate that the land's fair value at December 31, 2012, and 2013, was $980,000 and $1,050,000, respectively. Golden's reported retained earnings at December 31, 2012, and 2013, were $230,000 and $290,000, respectively.
Instructions
Answer the following, ignoring tax considerations.
(a) Prepare the original statements of financial position and income statements for the affected accounts.
(b) Prepare Golden's journal entry, if any, to record the change in accounting policy.
(c) Prepare the restated statements of financial position and income statements for the affected accounts.