Land (at revaluation) 1 January 2022 = RM 21,600,000

Buildings (at revaluation) 1 January 2022 = RM 60,000,000

Accumulated depreciation as at 1 January 2022:

Buildings = RM 10,000,000

Asset Revaluation Reserve (ARR) - Land = RM 2,700,000

1.The land was revalued on 1 January 2022 at RM 21,900,000. The change in fair value of the land has not been recorded by the company.

The building was revalued three years ago at a deficit of RM 1,000,000. The building was revalued again on 1 January 2022 at RM 51,500,000. Remaining useful life as at this date was 25 years.

The land is not depreciated. It is the policy of the company to adopt the revaluation model for land and building. Other non-current assets are measured using cost model except for investment property. Depreciation and amortisation is calculated based on monthly basis.

Based on (1),

i. Explain the accounting treatment on the revaluation of the land (show all workings)

ii. Prepare the journal entries relating to revaluation of the building (show all workings)

Investment properties 1 January 2022 = RM 4,000,000

2.Investment properties consists of two similar buildings rented out to third parties. On 1 January 2022, one of the building has been used as company office for administrative purposes, the carrying amount of that building is the same as the fair value as at this date. Investment properties are measured using fair value model. As at financial year end, the fair value of investment property is RM 2,100,000. Both buildings have a remaining useful life of 25 years

Based on (2),explain the accounting treatment of investment properties (show all workings)

Equipment at cost 1 January 2022 = RM 40,000,000

Accumulated depreciation as at 1 January 2022 :

Equipment = RM 18,000,000

3.On 1 January 2022, the company decided to sell one of its equipment which cost RM 10,000,000 (accumulated depreciation=RM 6,000,000). The equipment has not been used since 1 July 2020.An active programme has been made to locate the buyer. The equipment is being marketed at its fair value of RM 4,500,000. The expected cost to sell is RM700,000.The remaining equipment has remaining useful life of 4 years.

Based on (3), explain the accounting treatment of the equipment (show all workings)

On 1 July 2022, the company acquired a new equipment which cost RM 2,000,000 from Cloud Bhd. The company issued new ordinary shares as purchase consideration to Cloud Bhd. The equipment is to be depreciated on a straight line basis over 10 years with nil residual value. The company also received a government grant of RM500,000 on that date for the acquisition of the new equipment. It is the policy of the company to use the deferred income method for the government grant received.

Based on (4), show relevant journal entries. ( show all workings)