Question

can i please ger help with this entire question. i need detailed calculations and explanations

thank you

Please note: Added Tax (VAT) implications Ignore any normal income tax, as well as any Value Round off all amounts to the nearest Rand, and any percentages to two decimals. our answer must comply with International Financial Reporting Standards (IFRS). Part B Stimel generate rental income for the business. The cost price paid for the office building in cash R600 000 and the useful life of the office building is deemed to be 30 years. a Ltd purchased an office building on 1 January 2017 which it rents out, in order to Stinela Ltd has adopted the fair value model as its accounting policy for measuring investment property. The following fair values apply: 1 January 2017 31 December 2017 31 December 2018 600 000 700 000 650 000 Stimela Ltd has a financial year-end of 31 December. REQUIRED: 1. Jou rnalise the initial recognition and subsequent measurement of the office building. (7) 2. Calculate the annual depreciation amount to be provided.

Answer 1

Under the fair value the property is reported at the market value of the property at the end of the reporting period. Find below the journal entries:

Initial

Jan 1 2017

Office building Dr.                            $600,000

To cash                                                                                 $600,000

December 31 2017

Office building Dr.                            $100,000

Profit realized on revaluation                                      $100,000

December 31 2018

Loss realized on revaluation Dr. $50,000

Office building                                                                   $50,000

There is no depreciation when the property is being reported on fair market value.