Question

Exercises 1 Blue Limited acquired a property on 1 January 2018 at a cost of N$4.2 million. It was immediately leased out as an investment property for a period of 1.5 years until 30 June 2019. On 1 July 2019 the company took occupation of the property as its administrative headquarters. The fair values of the property were determined as follows: On 31/12/2018: N$4,500 000 On 01/07/2019: N$5,200 000 . On 31/12/2019: N$5,300 000 The accounting policy of the company is to depreciate buildings at 4% per annum on the straight-line basis. The company adopts the cost model for property, plant and equipment and the fair value model for investment properties. Required: a) Prepare an extract from the profit before tax note for the year ended 31 December 2019 b) Prepare an extract from the statement of financial position as at 31 December 2019

Answer 1

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Extract from Profit before Tax Note for year ended 31 Dec, 2019 Total Income XXXXX Expenses: Depreciation Expense (4% of $5.2 Mn for 6months) 1,04,000 Total Expense XXXXX Prefit Before Taxes XXXXX Extract From Statement of Financial position as at 31 Dec, 2019 Tangible Assets Property Less: Acc. Depreciation 52,00,000 50,96,000 Total Assets XXXXX Note: For a transfer from investment property carried at fair value to owner-occupied property or inventories, the fair value at the change of use is the 'cost' of the property under its new classification. Note: As Property valued by cost model it will not be revalued at end of the year.