- 8 Marks
FR – May 2019 – L2 – Q4c – Property, Plant, and Equipment (IAS 16)
Preparation of extracts of the statement of profit or loss and statement of financial position for Chidinma Ventures Plc, accounting for leasehold property revaluation.
Question
Chidinma Ventures Plc. acquired a 12-year lease on a property on 1 October, 2016 at a cost of N132 million. The company’s policy is to revalue its properties to their market value at the end of each year.
Accumulated amortization is eliminated, and the property is restated to the revalued amount. Annual amortization is calculated on the carrying values at the beginning of the year. The market values of the property on 30 September 2017 and 2018 were N127.05 million and N96.25 million, respectively. The existing balance on the revaluation surplus at 1 October, 2016 was N27.5 million. This is related to some non-depreciable land whose value had not changed significantly since 1 October 2016.
Required:
Prepare extracts of the statement of profit or loss and statement of financial position for the year ended 30 September 2017 and 2018 in respect of the leasehold property.
Find Related Questions by Tags, levels, etc.
- Tags: Amortization, IAS 16, Leasehold Property, Revaluation, Revaluation Loss, Revaluation Surplus
- Level: Level 2
- Topic: Property, Plant, and Equipment (IAS 16)
- Series: MAY 2019