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QUESTIONS X. XYZ has a building in Rumbar Pasir which it rents out. It accounts for investment property using the cost model. Device Alway The
QUESTIONS X. XYZ has a building in Rumbar Pasir which it rents out. It accounts for investment property using the cost model. Device Alway The building was bought 10 years ago at a cost of RM10 million and the Eestimated useful life was determined on purchase to be 50 years. Due to ecological changes, the area is prone to floods. The fair value of the FVD building at the end of the current year x14 was RM6 million. The present value of the flow of rental is RM4.2 million, taking a market interest rate of 10% Torqoqi 46) X 0.9709 Required: In your opinion, do you think that the asset is impaired? Substantiate your answer. 42000W c. b. In year x14, the market interest rate dropped to 3%. What is the effect of the change in interest rate on the carrying amount of the asset? The interest rate remained at 10% but in year x14 the government enlarged the area enclosed by the river and built embankments to stop flooding. Discuss how this action affects the value of the building
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