Question
Investment property is defined as property (land or a building or part of a building or both) held by the owner or by the lessee
Investment property is defined as property (land or a building or part of a building or both) held by the owner or by the lessee as right-of-use to Q1 or for Q2 or both, rather than for:
- Use in the production or supply of goods or services or for administrative purposes (MFRS 116 PPE); or
- Sale in the ordinary course of business (MFRS102 Inventory)
Owner occupied properties and those held for sale in the ordinary course of business (inventory) do not qualify as investment property.
Refer to the schedule above and answer Q1-Q2
- Q1: ___________
- Q2: ____________
Q3: Scenario 1
Polly Bhd uses its factory and other assets to produce kitchenware goods it sells. The factory is used in production process. When the goods produce are sold, they generate cash flows to Polly Bhd. How should the factory be accounted?
Q2: Scenario 2
Sunny Holdings Group Bhd is a business that develops and sell properties. The properties that the company holds for sale meet the definition of inventory. How should the properties be accounted?
Q1: Scenario 3
Baba Bhd earns cash from the rental income of the shophouses. How should the properties be accounted?
Refer to the above schedule, and determine the Standard that is applicable for each scenario (e.g. MFRS 116, MFRS 140, or MFRS 102)
- Q3: ___________
- Q4: __________
- Q5: __________
- A building that is owner occupied can be classified as investment property only if the owner-occupied portion is______________. E.g. ABC Bhd owns a 70-storey building and one-storey is used for administrative purpose. The building could be classified as investment property because the owner-occupied portion is insignificant.
- ___________is the secondary services provided to support the primary operation.
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