On 15 September 2020, Tweed Ltd acquired land on a remote island at a cost of $100
Question:
On 15 September 2020, Tweed Ltd acquired land on a remote island at a cost of $100 000. The land was held for future development as a resort when transport to the island was made available. At each reporting date, Tweed Ltd made the following assessments of the net selling price of the land and the value of the land to the business if kept for future use:
REQUIRED
a. At what amount should the land be recorded in the statement of financial position (balance sheet) of Tweed Ltd for each reporting date?
b. Assume that on 30 September 2022 the government cancelled all plans to provide transport to the island. There is no prospect of selling the land. The cost to Tweed Ltd of developing transport exceeds the present value of expected future benefits of operating the resort. How should Tweed Ltd account for this event?
Step by Step Answer:
a To answer this question we need to determine whether the land is to be recorded at cost or at a re...View the full answer
