Question 2

Investor Bhd bought an investment property on 1 January 2020 for RM400,000. Investor bought the property in anticipation of a capital gain over the next 5 years and intend to rent the property out to another company. The property has a useful life of 50 years.

By 31 December 2020 the property had increased in value to RM500,000.

Required:

1. Prepare the journal entries of the property for the year ended 31 December 2020 if Investor Ltd use the cost model.

(4 marks)

2. Show the journal for the year ended 31 December 2020 if Investor Ltd use the valuation model.

(4 marks)

3. Prepare the journal entries if the property value falls to RM350,000 on 31 March 2021 .