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Question 4 b On 1 January 2 0 2 1 , Armstrong Ltd purchased a building for its investment potential. The building cost GH 1

Question 4b
On 1 January 2021, Armstrong Ltd purchased a building for its investment potential. The building cost GH 1,000,000 with transaction cost of o10,000. The property has a useful life of 50 years. At the end of the year 31 December, 2021 the property's fair value had risen to GH& 1,300,000 with GH& 300,000 estimated depreciation over the life of the assets. You are required:
i. In accordance with IAS40 Investment property, Explain by showing workings how this property would be treated in the financial statement on the date of acquisition (initial recognition)
ii. Explain by showing workings how this property would appear in the financial statement on 31 December, 2021 under the two (2) models discussed by the standard. 10 marks
Question 4c
Orphic is a public listed company located at Wassa. The company operates in the mining industry and has a reporting date of 31st December. Orphic owns a number of prestigious apartments which it leases to miners who are under contract to promote its business. The apartments are let below market rate. The lease terms are short and are normally for six months. The leases terminate when the contracts for promoting the business terminate. Orphic wishes to account for the property as investment property with differences between market rate and actual rent to be charged to the statement of profit or loss.
Required: Discuss how the above would be accounted for in the financial statements of Orphic.
5 marks
Question 4d
In general, IFRS10 requires that parent companies should prepare and present consolidated financial statements. But a parent need not present consolidated financial statements under certain conditions, outline those three (3) conditions.
4 marks
Total (25 marks)
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