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 Ltds 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 Ltds retail shop from 2 January 20X1 to 31 December 20X3. Please round your answers to the nearest dollar.

Since CC Ltd adopts fair value, the gain or loss arising from the change in the fair value of the investment property must be recognised in the calculation of profit or loss for the period in which it arises.