2a. On 1 June 20X0, an entity based in Country A with a functional currency of CU buys an investment property in Country B with local currency FCU for FCU 500,000. The fair value of the investment property is reliably measurable in FCU without undue cost or effort on an ongoing basis. Consequently, in accordance with Section 16 Investment Property, the entity measures its investment property, after initial recognition, at fair value through profit or loss. The entity has a year-end of 31 December.

The spot exchange rates and fair values of the investment property (FVIP) are as follows:

1 June 20X0: CU1 = FCU1.1 and FVIP = FCU 500,000

31 December 20X0: CU1 = FCU1.05 and FVIP = FCU 520,000

31 December 20X1: CU1 = FCU 1.2 and FVIP = FCU 540,000

On 1 April 20X2 the investment property was sold for FCU 570,000 when the exchange rate is CU1 = FCU1.1.

Required:

i. Make Journal Entries for each of these transactions recognizing the purchase of investment property. ( 9 marks)

ii. Show a journal entry Derecognizing it after it is sold. (4 marks)