Golden Properties Corporation purchased a parcel of land in March 2022 for $1 million with the intent to construct a building on the property in the near future. At the time of purchase, 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 2023 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 management believes that changing the measurement model will provide more relevant information. Independent appraisals indicate that the land’s fair value at December 31, 2022 and 2023, was $980,000 and $1,050,000, respectively. Before application of the fair value model of accounting for investment properties, Golden’s reported net income for the years ended December 31, 2021, 2022, and 2023, was $73,000, $41,000, and $12,000, respectively; and Golden’s reported retained earnings at December 31, 2021, 2022, and 2023, was $189,000, $230,000, and $242,000, respectively. Golden has 100,000 common shares outstanding.

Instructions

Answer the following, ignoring income tax considerations and rounding earnings per share to the nearest cent.

a. Prepare the original comparative SFP as at December 31, 2022, and the original comparative income statement for the year ended December 31, 2022, for the affected accounts.

b. Prepare Golden’s journal entries, if any, to record the change in accounting policy.

c. Prepare the restated comparative statement of financial position as at December 31, 2023, and the restated comparative income statement for the year ended December 31, 2023, for the affected accounts.

d. From the perspective of an investor, discuss the effects of changing to the fair value model of accounting for investment properties on Golden’s financial statements and earnings per share.