Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Company B is constructing a property for future use as investment property. B applies the fair value model Previously the company was using the cost

Company B is constructing a property for future use as investment property. B applies the fair value model Previously the

company was using the cost model under IAS40

Now the company is changing to fair value mode. 1 July 20x6 the carrying amount of the property is 750 and the fairvalue of the property is AED 1,000. During the year end 30 June 20x7 company capitalizes maintenance costs of AED 400and borrowing cost of AED 100. Now the carrying cost is AED 1,250. The fair value of the property at 30 June 20x7 isAED 1,400.

Calculate the gain or loss

A. 650

B. 150

C. 550

Why the answer is 650, not 150? what is the basis of the calculation?

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

Financial Accounting

Authors: Robert Kemp, Jeffrey Waybright

3rd Edition

133427889, 978-0133427882

More Books

Students also viewed these Accounting questions