Question Tag: Revaluation Model

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CR – May 2021 – L3 – Q4c – Fair Value Measurement (IFRS 13)

Advise on measuring the fair value of land for residential purposes in financial statements.

Question

Kantala Limited is a company based in Abeokuta, the Ogun State capital. It uses the revaluation model for its non-current assets. Kantala Limited has several plots of farmland which are unproductive.

The company feels that the land would have more value if it were used for residential purposes.

There are several potential purchasers for the land, but planning permission has not yet been granted by the Abeokuta Planning Authority for use of the land for residential purposes.

However, preliminary enquiries with the planning authority seem to indicate that the planning permission may be granted. Additionally, the Ogun State Government has recently indicated that some agricultural land should be used for residential purposes.

Required:

Advise Kantala Limited on how to measure the fair value of the land in its financial statements. (2 Marks)

Answer

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Tags: Agricultural Land, Fair Value, IFRS 13, Revaluation Model
Level: Level 3

Topic: Fair Value Measurement (IFRS 13)

FR – Nov 2015 – L2 – Q7b – Fair Value Measurement (IFRS 13)

Explaining accounting treatment for investment property and calculating values for the financial statements.

Question

KOLA NITDA Nigeria Plc is a company engaged in the manufacturing of hand sanitizer to prevent Ebola disease. The following information relates to property owned by the company:

N’000
Land – Plot 404 Apapa Industrial Area
Building therein (acquired June 30, 2013)
Improvement to the building to extend rented floor capacity
Repairs and maintenance to investment property for the year
Rental received for the year

Approximately six percent of the property floor space is used as the administrative head office of the company. The property can be sold only as a complete unit. The remainder of the building is leased out under operating leases. The company provides lessees with security services.

The company values investment property using the fair value model on December 31, 2014, which is the company’s year-end. Tewogbade & Co. (an independent valuer) valued the property at N144,000,000 on that date.

Required:
i. Advise the Directors of KOLA NITDA Nigeria Plc on how the property should be treated in the financial statements of the company as at December 31, 2014 in order to ensure strict compliance with provisions of IAS 40. (5 Marks)
ii. Calculate the value of investment property that should be disclosed in the statement of financial position as at December 31, 2014 and the amount that should be charged to the statement of profit or loss and other comprehensive income for the period then ended. (5 Marks)

Answer

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Tags: Fair Value, IAS 40, Investment Property, Property Accounting, Revaluation Model, Valuation
Level: Level 2

Topic: Fair Value Measurement (IFRS 13)
Series: NOV 2015

FR – Nov 2015 – L2 – Q7a – Fair Value Measurement (IFRS 13)

Explaining the difference between accounting treatment for investment properties and owner-occupier properties under IAS 40 and revaluation model.

Question

The objectives of IAS 40 – Investment Property is to prescribe the accounting treatment and disclosure requirements for investment property. The main issue in accounting for investment properties is to distinguish these properties separately from owner-occupier properties.

Required:
Explain how treatment of an investment property carried at fair value model differs from an owner-occupier property carried under revaluation model.

Answer

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Tags: Fair Value, IAS 40, Investment Property, Real Estate Accounting, Revaluation Model
Level: Level 2

Topic: Fair Value Measurement (IFRS 13)
Series: NOV 2015

FR – MAY 2021 – L2 – Q5c – Intangible Assets Accounting

Explain accounting for manufacturing software and training costs as per IAS 38.

Question

Sawla Ltd (Sawla) prepares financial statements under International Financial Reporting Standards (IFRSs). On 1 June 2020, Sawla acquired a manufacturing software at the cost of GH¢1.5 million. The software is estimated to have a useful economic life of 5 years with no residual value. To develop staff capacity to a higher level, a training program was organised for production staff on the use of the software at a cost of GH¢250,000 during the year. Management is convinced the staff training will generate more revenue for the entity through future economic benefits. Sawla intends to adopt the revaluation model under IAS 38 Intangible Assets and to revalue the software at the end of each year. Accordingly, the software was valued by a software engineer at GH¢1.7 million on 31 December 2020. Sawla accepted this value and decided to incorporate the valuation in the financial statements.

Required:
In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020.
(5 marks)

Answer

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Tags: Accounting Standards, IAS 38, Intangible Assets, Revaluation Model, Training Costs
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2021

FR – April 2022 – L2 – Q2d – Conceptual Framework for Financial Reporting

Explain the definition of investment property under IAS 40 and discuss the differences between the fair value model and revaluation model for investment properties.

Question

d) The recognition, measurement, and disclosure of an Investment Property in accordance with IAS 40: Investment Property appears straightforward. However, this could get complicated when measured either under the fair value model or under the revaluation model.

Required:
i) Define Investment Property under IAS 40 and explain the rationale behind its accounting treatment. (2 marks)

ii) Explain how the treatment of an investment property carried under the fair value model differs from an owner-occupied property carried under the revaluation model. (2 marks)

Answer

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Tags: Fair Value Model, IAS 40, Investment Property, Owner-Occupied Property, Revaluation Model, Valuation Models
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: APR 2022

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

Question

Once an entity has recognized an item of Property, Plant, and Equipment as an asset in its books, the entity can choose between two models (or methods) to account for the asset in subsequent measurement periods, that is, the period(s) after the asset has been acquired and before its disposition. The two models are the cost model and the revaluation model. The entity shall apply the same model to the entire class of property, plant, and equipment to which that asset is of similar nature and use in the entity’s operations.

Required:
Identify TWO differences between the cost and revaluation model for the measurement of Property, Plant, and Equipment. (4 marks)

Answer

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Tags: and Equipment, Cost Model, IAS 16, Plant, Property, Revaluation Model
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2018

CR – Nov 2018 – L3 – Q2d – IAS 38: Intangible assets

Recommend the carrying amount of various intangible assets, including licenses, software, and rights, in the financial statements of Nyame Ltd for the year ended 31 December 2017.

Question

Nyame Ltd incurred the following expenditure during the year:

The company’s policy is to use the revaluation model for its intangible assets where a market valuation is available and permitted.

Required:
Recommend with suitable calculations the carrying amount of intangible assets at the end of the year 31 December 2017 according to the guidance given in IAS 38: Intangible Assets.
(5 marks)

Answer

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Tags: IAS 38, Intangible Assets, Licenses, Revaluation Model, Software, Website Costs
Level: Level 3

Topic: IAS 38: Intangible assets
Series: NOV 2018

CR – May 2021 – L3 – Q4c – Fair Value Measurement (IFRS 13)

Advise on measuring the fair value of land for residential purposes in financial statements.

Question

Kantala Limited is a company based in Abeokuta, the Ogun State capital. It uses the revaluation model for its non-current assets. Kantala Limited has several plots of farmland which are unproductive.

The company feels that the land would have more value if it were used for residential purposes.

There are several potential purchasers for the land, but planning permission has not yet been granted by the Abeokuta Planning Authority for use of the land for residential purposes.

Required:

Advise Kantala Limited on how to measure the fair value of the land in its financial statements. (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agricultural Land, Fair Value, IFRS 13, Revaluation Model
Level: Level 3

Topic: Fair Value Measurement (IFRS 13)

FR – Nov 2015 – L2 – Q7b – Fair Value Measurement (IFRS 13)

Explaining accounting treatment for investment property and calculating values for the financial statements.

Question

KOLA NITDA Nigeria Plc is a company engaged in the manufacturing of hand sanitizer to prevent Ebola disease. The following information relates to property owned by the company:

N’000
Land – Plot 404 Apapa Industrial Area
Building therein (acquired June 30, 2013)
Improvement to the building to extend rented floor capacity
Repairs and maintenance to investment property for the year
Rental received for the year

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fair Value, IAS 40, Investment Property, Property Accounting, Revaluation Model, Valuation
Level: Level 2

Topic: Fair Value Measurement (IFRS 13)
Series: NOV 2015

FR – Nov 2015 – L2 – Q7a – Fair Value Measurement (IFRS 13)

Explaining the difference between accounting treatment for investment properties and owner-occupier properties under IAS 40 and revaluation model.

Question

Required:
Explain how treatment of an investment property carried at fair value model differs from an owner-occupier property carried under revaluation model.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fair Value, IAS 40, Investment Property, Real Estate Accounting, Revaluation Model
Level: Level 2

Topic: Fair Value Measurement (IFRS 13)
Series: NOV 2015

FR – MAY 2021 – L2 – Q5c – Intangible Assets Accounting

Explain accounting for manufacturing software and training costs as per IAS 38.

Question

Required:
In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020.
(5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Standards, IAS 38, Intangible Assets, Revaluation Model, Training Costs
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2021

FR – April 2022 – L2 – Q2d – Conceptual Framework for Financial Reporting

Explain the definition of investment property under IAS 40 and discuss the differences between the fair value model and revaluation model for investment properties.

Question

Required:
i) Define Investment Property under IAS 40 and explain the rationale behind its accounting treatment. (2 marks)

ii) Explain how the treatment of an investment property carried under the fair value model differs from an owner-occupied property carried under the revaluation model. (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fair Value Model, IAS 40, Investment Property, Owner-Occupied Property, Revaluation Model, Valuation Models
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: APR 2022

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

Question

Required:
Identify TWO differences between the cost and revaluation model for the measurement of Property, Plant, and Equipment. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: and Equipment, Cost Model, IAS 16, Plant, Property, Revaluation Model
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAY 2018

CR – Nov 2018 – L3 – Q2d – IAS 38: Intangible assets

Recommend the carrying amount of various intangible assets, including licenses, software, and rights, in the financial statements of Nyame Ltd for the year ended 31 December 2017.

Question

Nyame Ltd incurred the following expenditure during the year:

The company’s policy is to use the revaluation model for its intangible assets where a market valuation is available and permitted.

Answer

Find Related Questions by Tags, levels, etc.

Tags: IAS 38, Intangible Assets, Licenses, Revaluation Model, Software, Website Costs
Level: Level 3

Topic: IAS 38: Intangible assets
Series: NOV 2018

Question Tag: Revaluation Model

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CR – May 2021 – L3 – Q4c – Fair Value Measurement (IFRS 13)

Advise on measuring the fair value of land for residential purposes in financial statements.

Required:

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FR – Nov 2015 – L2 – Q7b – Fair Value Measurement (IFRS 13)

Explaining accounting treatment for investment property and calculating values for the financial statements.

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FR – Nov 2015 – L2 – Q7a – Fair Value Measurement (IFRS 13)

Explaining the difference between accounting treatment for investment properties and owner-occupier properties under IAS 40 and revaluation model.

You're reporting an error for "FR – Nov 2015 – L2 – Q7a – Fair Value Measurement (IFRS 13)"

FR – MAY 2021 – L2 – Q5c – Intangible Assets Accounting

Explain accounting for manufacturing software and training costs as per IAS 38.

Required: In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020. (5 marks)

You're reporting an error for "FR – MAY 2021 – L2 – Q5c – Intangible Assets Accounting"

FR – April 2022 – L2 – Q2d – Conceptual Framework for Financial Reporting

Explain the definition of investment property under IAS 40 and discuss the differences between the fair value model and revaluation model for investment properties.

You're reporting an error for "FR – April 2022 – L2 – Q2d – Conceptual Framework for Financial Reporting"

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

You're reporting an error for "FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications"

CR – Nov 2018 – L3 – Q2d – IAS 38: Intangible assets

Recommend the carrying amount of various intangible assets, including licenses, software, and rights, in the financial statements of Nyame Ltd for the year ended 31 December 2017.

You're reporting an error for "CR – Nov 2018 – L3 – Q2d – IAS 38: Intangible assets"

CR – May 2021 – L3 – Q4c – Fair Value Measurement (IFRS 13)

Advise on measuring the fair value of land for residential purposes in financial statements.

Required:

You're reporting an error for "CR – May 2021 – L3 – Q4c – Fair Value Measurement (IFRS 13)"

FR – Nov 2015 – L2 – Q7b – Fair Value Measurement (IFRS 13)

Explaining accounting treatment for investment property and calculating values for the financial statements.

You're reporting an error for "FR – Nov 2015 – L2 – Q7b – Fair Value Measurement (IFRS 13)"

FR – Nov 2015 – L2 – Q7a – Fair Value Measurement (IFRS 13)

Explaining the difference between accounting treatment for investment properties and owner-occupier properties under IAS 40 and revaluation model.

You're reporting an error for "FR – Nov 2015 – L2 – Q7a – Fair Value Measurement (IFRS 13)"

FR – MAY 2021 – L2 – Q5c – Intangible Assets Accounting

Explain accounting for manufacturing software and training costs as per IAS 38.

Required: In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020. (5 marks)

You're reporting an error for "FR – MAY 2021 – L2 – Q5c – Intangible Assets Accounting"

FR – April 2022 – L2 – Q2d – Conceptual Framework for Financial Reporting

Explain the definition of investment property under IAS 40 and discuss the differences between the fair value model and revaluation model for investment properties.

You're reporting an error for "FR – April 2022 – L2 – Q2d – Conceptual Framework for Financial Reporting"

FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify two differences between the cost model and revaluation model for Property, Plant, and Equipment.

You're reporting an error for "FR – May 2018 – L2 – Q5c – Financial Reporting Standards and Their Applications"

CR – Nov 2018 – L3 – Q2d – IAS 38: Intangible assets

Recommend the carrying amount of various intangible assets, including licenses, software, and rights, in the financial statements of Nyame Ltd for the year ended 31 December 2017.

You're reporting an error for "CR – Nov 2018 – L3 – Q2d – IAS 38: Intangible assets"

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Required:
In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020.
(5 marks)

Required:
In accordance with IAS 38: Intangible Assets, explain how to account for the above transactions for the year to 31 December 2020.
(5 marks)