Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Yellow Mountain Investment Limited is a property development company. You have been approached by the accountant, Ms Anything, for advice on IAS 40, Investment Property

Yellow Mountain Investment Limited is a property development company. You have been approached by the accountant, Ms Anything, for advice on IAS 40, Investment Property in relation to the transactions listed below. The company year-end is December.

Property 1 On the 1st of April 2022, the floods in KZN, damaged the property on which the companys headoffice was situated in Westville, KZN. The head office had to be relocated to another property based in the Durban North area. This property was previously let to tenants under an operating lease. The fair values of the Durban Norths property were as follows: 31st December 2021 R21 420 000 1 st April 2022 R21 840 000 As at 1st of April 2022: - The land element of the property if R5 040 000 - The property had an estimated useful life of 20 years. Property 2 On 30th November 2022, Yellow Mountain Investment Limited decide to sell two of its investment properties. Below are the details for these 2 properties Details Amaweli (based in Umhlanga) Miramar (Based on the South Coast) R R Fair Value 31 December 2021 12 600 000 16 800 000 Fair Value 31 December 2022 11 760 000 17 220 000 - The Amaweli Property is to be sold after re-development. Redevelopment commenced on the 30th November 2022. - The Miramar Property is to be sold without redevelopment. 3 Property 3 During 2022, two new investment properties were bought for a total of R71 400 000. Legal and transfer duty costs totalled an amount of R1 680 000. The company uses the cost model for Property, Plant & Equipment, and the fair vale model for Investment Property. All properties measured under the cost model are depreciated on a straightline basis over the assets useful life. The combined fair value of the investment properties is as follows: Details Combined Fair value R 31 December 2021 420 000 000 31 December 2022 525 000 000 REQUIRED Explain how issues 1, 2 and 3 should be accounted for in the financial statements of Yellow Mountain Investment Limited for the year ended 31 December 2022. 1. Property 1 (12) 2. Property 2 (11)

3. Property 3

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Organizational Communication A Handbook Of Research Theory And Practice

Authors: Owen Hargie, Dennis Tourish

2nd Edition

0415414466, 978-0415414463

More Books

Students also viewed these Accounting questions

Question

What is the AIDA model, and what are its limitations?

Answered: 1 week ago

Question

What is conservative approach ?

Answered: 1 week ago

Question

What are the basic financial decisions ?

Answered: 1 week ago

Question

6. Identify seven types of hidden histories.

Answered: 1 week ago

Question

What is human nature?

Answered: 1 week ago