Land and building, situated in the industrial area, comprises of a factory building and offices, was purchased in the year 2000. The board of directors estimated the current market value of the property to be K200, 000,000 at 31st December 2005.

Required

a) Give detailed comments on management’s decision to classify land and building as investment properties.

b) If the value of land was separate from that of buildings, what would be the accounting treatment of each one of them? Is it possible to provide depreciation on them? Refer to any relevant accounting standards or financial reporting standards

Answer rating: 100% (QA)

a Managements decision to classify land and building as investment properties seems reasonable based on the given information Investment properties ar... View the full answer