You are a recent accounting graduate and have been employed in the Financial Reporting Unit of Vicinity Centres (VCX), an ASX listed real estate investment trust. The Risk management Committee of the Board has become increasingly concerned about the changes in the retail industry, and this is evidenced by information on retail sales released by the Australian Bureau of Statistics and the consequences this has for retailers, such as Myer, David Jones, Oroton and Specialty Fashion Group who are major tenants.

You are required to prepare a report for the CFO considering the potential impacts of the changes in the retail industry of VCX.

a)With reference to VCX identify and summarise the accounting policies relating to investment properties and how these are dictated by regulation.

b)With reference to VCX identify and explain the flexibility management has available in the determination of investment property values.

c)With reference to VCX explain the potential impacts of the changes in the retail industry on the financial reports (balance sheet and income statement impacts).

d)Evaluate the potential economic consequences of these changes in the retail industry on the financial reports of VCX. This should be answered using the accounting theory related to the use of financial reports (Week 0 material)