Bally Limited is an investment company that purchases buildings and holds them for a number of purposes such as resale leasing and its own use.

On 1 January 2020, Bally purchased an old building, The Towers, for R300 000. Conveyancers’ fees amounted to R20 000.

- The building is situated in an isolated part of Cape Town and there is no development anywhere nearby. At the time of purchase, there had been no property transactions in this area for many years and the possibility of leasing the building to tenants was remote.

- In November 2020, the development began of a new industrial park in the area. As a result, the building was able to be leased to tenants involved in the development of the industrial park. Due to the influx of people into the area, the directors decided to paint one side of the building with the corporate logo of Bally Limited.

- This building has never had an air-conditioning system. After numerous complaints from tenants about not being able to tolerate the Durban heat, Bally Limited decided to upgrade the building by installing a ducted air-conditioned system on the 1st of December 2020.

- The cost of the installation included the following:

o Adjustments to the structure of the building R30 000

o Painting R50 000

o Air-conditioning system R200 000

o Installation costs R50 000 The ducted air-conditioning system has a 10-year life and a nil residual value.

- As a result of the new industrial park, there was suddenly a demand for properties in the area. As a result, the fair value of Bally Limited was able to be determined on 31 December 2020 at R420 000. Bally Limited would like to measure this investment property at fair value now that fair values have become available.

- The building has a 10-year useful life and an estimated residual value of R50 000.

Bally Limited also holds other investment property, which is measured under the fair value model. The fair value of this other investment property is as follows:

1 January 2020 R1 000 000

31 December 2020 R1 250 000

Required:

Prepare the journal entries for the year ended 31 December 2020.