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CASE VeeDa Property Bhd., a public-listed company in Kuala Lumpur,STUDY ventured into the construction of a mega shopping mall in Kelantarn one of the largest
CASE VeeDa Property Bhd., a public-listed company in Kuala Lumpur,STUDY ventured into the construction of a mega shopping mall in Kelantarn one of the largest shopping malls in the East Coast of Peninsular Malaysia. The construction of the shopping mall was completed on 31 December 2014. The total cost of the construction of the shopping mall was RM170 million. VeeDa Property Bhd. has engaged an independent valuation expert to provide a fair value of the shopping mall on an annual basis. The company paid an annual fee of RM80,000 to the valuation expert for his services. According to the expert, the fair value of the shopping mall at the end of the year are: al Accounting and Reporting 2 2014 RM200 million 2015 RM250 million 2016 RM300 million The valuation expert estimates that the useful life of the shopmin mall is 20 years and its residual value is RM10 million. The company has been offered with a lucrative buying price three local investors who are interested to purchase the shopp mall. The company's board of directors is now considering either to sell the shopping mall to one of those investors or to hold the property for the purposes of earning rentals by renting out the space in the shopping mall to tenants. The company will provide the security and maintenance services to the tenants if it opts to rent out the shopping mall. It is estimated that the company would incur RM3.5 million for security services and RM2.2 million for maintenance services per year The financial year-end for VeeDa Property Bhd. is on 31 August every year. The group accountant of VeeDa Property Bhd. applies the relevant MFRSs in the preparation of financial statements. Required Discuss the accounting treatment for the shopping mall if the company decides to: (a) sell to investor (b) rent out to tenants ent must be based on the requirement MFRS 140-Investment Property
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