Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ACC206: CC Ltd, a company incorporated in Singapore with December 31 year-ends, acquired a retail shop on 2 January 20X1 for $600,000 with the intention

ACC206:

CC Ltd, a company incorporated in Singapore with December 31 year-ends, acquired a retail shop on 2 January 20X1 for $600,000 with the intention of renting it out. The property is leasehold with 20 years remaining on the lease. It has a zero residual value. On 1 July 20X1, CC Ltd rented out the retail shop to an unrelated company for a monthly rental of $8,000, payable at the end of each month. After 2 years, CC Ltd managed to terminate the lease with the existing tenant on 30 June 20X3. CC Ltd used the retail shop for its own operations from 1 July 20X3 onwards.

The market value of CC Ltd's retail shop was determined as follows: 31 December 20X1 : $800,000 31 December 20X2 : $700,000 1 July 20X3 : $740,000

CC Ltd adopts the fair value model under FRS 40 Investment Property and adopts the cost model under FRS 16 Property, Plant and Equipment. CC Ltd depreciates all its assets on a straight-line basis where applicable.

Required:

Illustrate the accounting for the retail shop by preparing the journal entries (with journal narratives) to record the various events relating to CC Ltd's retail shop from 2 January 20X1 to 31 December 20X3. Please round your answers to the nearest dollar.(21 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Reporting and Analysis

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

3rd edition

9781337909402, 978-1337788281

More Books

Students also viewed these Accounting questions

Question

3. It is the commitment you show that is the deciding factor.

Answered: 1 week ago