IAS 40 Investment Property - Example 2 On November 1, X1 entity XY acquires a building for EUR 570,000 (payment is effected by bank transfer on the same day). Non-refundable property transfer taxes and direct legal costs of respectively EUR 15,000 and EUR 10,000 were incurred in acquiring the building. The useful life of the building is 20 years. In December X1 entity XY redeveloped the building into office space for rent under operating leases to independent third parties. Expenditures on redevelopment were EUR 17.800 planning permission and EUR 40,000 construction costs. The redevelopment was completed and the office space ready for rental on January 1, X2. Starting on January 1, X2 the building is rented out to entity A as office space under an operating lease. The lease term is for four years. Monthly lease payments of EUR 5,800 are effected by entity A by bank transfer, starting on January 31, X2 During the next years, prices for land fluctuate significantly, also causing volatility in market rents for buildings. Therefore, the fair value of the building develops as follows (in EUR): Dec 31, X1 Dec 31, X2 Dec 31, X3 Dec 31, X4 Dec 31, X5 fair value 616,000 665,500 630,000 648,000 705,800 Entity XY applies the fair value model under IAS 40 for measurement of investment property. Carry out all the necessary journal entries for the business years X1-X5 from the perspective of entity XY. Journal entries so far: No journal entries have been carried out so far