On 1 July 2019, Teja Bhd acquires a 6-storey building in Alor Setar. Four storeys of the
Question:
On 1 July 2019, Teja Bhd acquires a 6-storey building in Alor Setar. Four storeys of the building are occupied by Teja Bhd's management for administrative purposes. The remaining two storeys are let out to tenants. The cost of the building is RM12 million and the useful life of the building is 40 years. Each storey can be sold separately. The company adopts the monthly basis method of depreciation. On 1 July 2021, the escalating interest rates caused the company to conduct an impairment test on the four storeys that are used by Teja Bhd's management for business purposes. The current selling price of these four storeys was RM8,000,000 while sales commission was RM800,000. Estimated present value of future cash flows that can be derived from its continuing use of the four storeys was RM6,400,000.
The financial year end is on 31 December.
Required
Determine the amount of recoverable amount and impairment loss in accordance with MFRS136 Impairment of Assets on 1 July 2021.
Identify the carrying amount of four storeys building as at 31 December 2021.
Statistics For Business And Economics
ISBN: 9780538481649
11th Edition
Authors: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams