Johnson Ltd owns two investment properties, X and Y, the fair values of which are:

31 December 2019 31 December 2020

$ million $ million

Property X 15 20

Property Y 10 8

The original cost of the properties was $9 million each when they were acquired on 1

January 2019. The entity uses the fair value model to value all its investment properties.

2. Fair value model:
   • The investment property is measured at fair value at the end of each reporting period.
   • Any gain or loss on re-measurement is included in profit or loss for the period.
   • The investment property is not depreciated

An entity shall not change its chosen model unless the change will result in a more appropriate valuation.

FV Model Gains and Losses

The carrying values of buildings A and B are $60,000 and $80,000 respectively. Their FVs are determined to be $50,000 and $88,000.

What would be the correct accounting treatment?

For A there is a loss of 10 000 and for B there is a gain of 8 000.

A- DR SOCI (loss on valuation) 10 000

CR Investment property 10 000

B- DR Investment property

CR SOCI (gain on revaluation)

Required:

Show how will these transactions be accounted for in the statement of financial position.