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Kappi Capital Inc. holds a number of investment properties that it accounts for under IAS 40...

Kappi Capital Inc. holds a number of investment properties that it accounts for under IAS 40 using the fair value method. The company purchased a new rental property on January 1, 2015, for $1,500,000. The appraised value on December 31, 2015, was $1,450,000 and the appraised value on December 31, 2016, was $1,625,000.
Required: Prepare the adjusting journal entries for this property on December 31, 2015, and December 31, 2016.

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Answer #1
Date Particulars Debit Credit
Jan.1, 2015 Investment Property A/c____Dr 1500000 -
To Bank A/c - 1500000
(Being property purchased)
Dec.,31, 2015 Fair Value Through Profit & Loss A/c____Dr. 50000
To Investment Property A/c 50000
(Being fair value loss in investment property recognised)

Dec.,31

2016

 Investment Property A/c_____________Dr. 175000
To Fair Value Through Profit & Loss A/c 175000
(Being fair value gain in the investment property recognised)
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