ACCT3604 SECTION A Instructions: Answer ALL questions from this section: Millennium Enterprise started construction of investment property A in 2014 and investment property B in 2015. A was completed in the first quarter of 2016 and B was expected to be completed in 2017. The cost of construction as at 2015 December 31 amounted to $10M for A and $5M for B. During 2016, Millennium incurred an additional $1M for the completion of A during the first quarter and $6M for B. As part of the 2015 year-end procedures, Millennium carried out a valuation of the investment property under construction. This revealed that the fair value of the properties at 2015 December 31 was $14M for A and $8M for B. At 2016 December 31, the fair value of A is $16M and the fair value of B is $14M. Millennium Enterprise measures its investment properties at fair value and does not early adopt IAS 40. A. How does Millennium Enterprise account for investment properties A and B, by: i. Initial Recognition (1 mark) ii. Fair value gain/loss (3 marks) iii. FS recognition (2 marks) B. According to IAS 40, list TWO (2) examples of investment properties and TWO (2) that are not considered investment properties. (4 marks) C. List TWO (2) disclosures as required by the standard if the entity chooses the: i. Cost-based method (2 marks) ii. Fair value method (2 marks) D. How is investment property different from PPE? (3 marks) E According to IAS 16 (PPE) what are subsequent expenditures and how does that standard direct treatment of these? (3 marks) (Total 20 marks)