SCENARIO THREE

Kaymore Plc acquired a piece of land on 1 April 2018. The purchase price of the land was K200,000. On the same date, Kaymore Plc incurred legal fees of K10,000 in relation to transfer of ownership. Kaymore Plc intends to keep the land and sell it when the market price increases substantially. The market price of land at 31 March 2019 was K225,000.

Kaymore Plc does not know how to treat the land in its financial statements for the year ended 31 March 2019.

Required:

Advise Kaymore Plc on how the above transaction should be treated in its financial statements for the year ended 31 March 2019. (6 marks)