Task 1: Property A vs. Property B (LO 1.2). The following information is provided for two items of property for a company Property A was purchased five years ago for $400,000. It was intended to be used to build another factory, but the company has now reorganised its original factory and it is no longer required. The company now intends to sell it. The current property market has dropped but it is expected to rise when interest rates fall. If sold now, the property is expected to realise $360,000. Real estate experts have predicted that if the company wait for the property market to recover, it could realise $450,000 Property B is the current factory. It was purchased ten years ago for $200,000. If sold now, it would be expected to realise $380,000 (and $500,000 if the property market recovers). The company has various estimates about its contribution to the profit of the company. Using current interest rates and various assumptions about future sales and costs, the property is calculated to have a present value in terms of future cash flows) of $900,000. It is insured for $600,000 because this is the cost required to rebuild it. The company has always recorded property using the historic cost basis. Other companies in the same industry have traditionally used the same basis, although about 40% now use the fair value basis. (adapted from "Contemporary Issues in Accounting" by Michaela et al., 2012.) Required: answer the following questions (a) For each of the properties, identify which cost or value would best meet each of the following qualitative characteristics (consider each separately) of: Faithful representation o Verifiability o Comparability o Understandability Relevance (this is important in IFA 2, less significant for this subject) (b) For each of the properties, consider which option would provide the highest quality accounting information. Explain why. (c) Does everyone agree with your choices? Why or why not