PROBLEM 1

The following items are included in the Investment Property Account of Avida Inc.:

Land held for future plant site P 1,000,000

Land held for a currently undetermined use 2,000,000

Building held by entity under finance lease and leased out under operating lease 3,000,000

Property that is being constructed or developed on behalf of third parties 1,000,000

Building that is being developed for future use as administrative building 2,000,000

Property that is leased out to another entity under a finance lease 1,000,000

Machine leased to another entity under an operating lease 3,000,000

Equipment held for currently undetermined use 1,000,000

Car held for a long-term capital appreciation 2,000,000

Building occupied by employees paying rent at market rate 4,000,000

Property held for sale in the ordinary course of business 3,000,000

Land classified as held for sale 5,000,000

Required: What is the total amount of Investment Property?

PROBLEM 2

On January 1, 2020, Alveo Inc. has constructed a building to be held for capital appreciation and for operating lease. The total costs of the building is P10,000,000 with a residual value of P1,000,000 and useful life of 10 years. An independent valuation expert provided the following fair values of the building:

December 31, 2020P1,500,000

December 31, 20212,500,000

December 31, 20222,300,000

On January 1, 2023, Alveo Inc. sold the building for P2,100,000.

REQUIRED:

1. Prepare the entry for the preceding transaction assuming the use of:

(a) cost model & (b) fair value model

2. Based on the result of your audit, determine the following:

I. Depreciation Expense on 2020 using Cost Model

II. Depreciation Expense on 2021 using Fair Value Model

III. Carrying value of Investment Property on December 31, 2021 using Fair Value Model

IV. Carrying value of Investment Property on December 31, 2022 using Cost Model

V. Gain or (loss) on changes in fair value of Investment Property on December 31, 2022 using Fair value Model

VI. Gain or (loss) on changes in fair value of Investment Property on December 31, 2021 using Cost Model

VII. Gain or (loss) on sale of Investment Property on January 1, 2023 using Fair value model

VIII. Gain or (loss) on sale of Investment Property on January 1, 2023 using Cost Model