Mumu $($Pty$)$ Ltd is a company that manufactures a variety of dairy products for sale in supermarkets and coffee shops around South Africa. The company has a factory in Thembisa and commercial property in Commissioner Street.

The following is an extract from the Mumu $($Pty$)$ Ltd$$s Statement of Financial Position as at $30$ June $2013$ before the valuation done by Mr$.$ Clover. An independent valuator, Mr$.$ Clover, was hired by Mumu $($Pty$)$ Ltd to value both the factory and the commercial property.

Extract of Financial Statements as at $30$ June $2013$

$2013$

$2012$

Property, plant and equipment:

COST:

$$

Commercial property$-$ Fair Value

$?$

$7308000$

$$

Plant $/$ factory

$($including land upon which this has been built$)$

$58912000$

$58912000$

ACCUMULATED DEPRECIATION:

$$

Commercial Property

$?$

$(974400)$

$$

Plant$/$factory

$($including land upon which this has been built$)$

$(17673600)$

$(11782400)$

Commercial Property $-$ Commissioner Street:

The commercial property is currently held by Mumu $($Pty$)$ Ltd for future expansion. The property was acquired on $1$ July $2008$ and at that date the financial manager estimated the useful life of the property to be $30$ years. Due to the current economic conditions it was decided that the expansion should be halted and the property to be rented out. The property is being rented out to Danonee Ltd as of $1$ January $2013.$

Due to the growing demand for office property in the Johannesburg central business district as well as the increase in the value of property noted as a direct result of the restoration project in the city centre, the commercial property was valued at the market selling price. This price was determined by way of a comparison of comparative properties and the selling prices that they realised, adjusted for changes in the market, area, inflation, etc. Based on the

independent appraisers evaluation of the market it estimated that the property $($including land and buildings$)$ could be sold for R$10500000$ at $1$ January $2013$ and R$15000000$ as at $30$ June $2013.$

All owner occupied property is accounted for on the revaluation model in terms of IAS$16.$ Revaluation of property is as per the net replacement value method.

The company accounts for investment property based on the fair value model in terms of IAS $40.$

You are required to:

Prepare the necessary journal entries to account for the valuation with respect to the commercial property in Commissioner Street.

Narrations are required.

Ignore all the related tax and deferred tax entries.