Hemmar Inc.a publicly listed company in Canadaventured into construction of a mega-shopping mall in Edmontonwhich is rated as the largest shopping mall in North America. Thecompany's board of directorsafter much market research,decided that instead of selling theshopping mall to a local investor who had approached them several times with excellent offersthat he steadily increased during the year of construction, the company would hold this propertyfor the purposes of capital appreciation and earning rental income from mall tenants.HemmarInc. retained the services of a real estate company to find and attract many important retailers torent space in the shopping mall, and within months of completion at the end of 2017,theshopping mall was fully occupied. The following costs were incurred in the construction of the new building:

The independent appraiser felt that the useful life of the shopping mall was 20 years and itsresidual value was $ 100,000.

a. Calculate the Total Cost of the Building. (4 points) b. Describe the impact on the company's income statement and prepare the necessary journal entries for 2017,2018,2019, and 2020 if it decides to treat the shopping mall as an investment property under IAS 40:

i.Using the fair value model.

ii.Using the cost model. Note that the mall's rental income and expenses would be the same under both options, and thuscan be omitted from the analysis for this exercise.

Costs $ 300,000 Direct Labor Interest on Loan to Finance Construction 69,300 Allocation of Plant Overhead 199,700 Materials 366,100 Architectural Drawings. 10,900 Allocation of President's Salary 54,000 The company used an independent appraiser to determine the mall's fair value annually. According to the appraisal, the fair values of the shopping mall at December 31, 2017, and at each subsequent year end were: Year $ 2017 1 million 2018 1.1 million 2019 1.3 million 2020 1.15 million