The following information refers to the non-current assets on Dubley Ltd for the year ended 31 December
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Question:
The following information refers to the non-current assets on Dubley Ltd for the year ended 31 December 2022.
Land (purchased on 01 January 2022) $1,600,000
Office building thereon (purchased on 01 January 2022) 4,200,000
Improvements to the building (Up to 28 February 2022) 800,000
Rental income received 400,000 Repairs and maintenance 100,000
The building is used as Investors Ltd administration building. The company occupies only 5% of the floor space. The remainder of the building is leased out for $40,000 per month from 01 March 2022.
On 31 December 2022, the financial year-end of Investors Ltd, Mr Blister, an independent sworn appraiser who holds a recognised and relevant professional qualification and has recent experience in the location and category of the property being valued, valued the property at the following
fair values: $
Land 2,000,000
Building 5,200,000
The valuation is based on current market prices for similar property in the area where Investor`s property are held. Investors Ltd applies International Accounting Standard (IAS) 40 Investment Property on its investment property according to the fair value model. The company shows a profit before tax of $ 900,000, including the above information, for the year ended 31 December 2022.
Required:
(i) Which items (including their amount) should be taken into account to calculate the profit before tax (Justify your answer)
(ii) Calculate (showing your workings) the amount at which Investment Property will be shown in the Statement of Financial Position.
Related Book For
Auditing Assurance Services and Ethics in Australia an Integrated Approach
ISBN: 978-1442539365
9th edition
Authors: Alvin A Arens, Peter J. Best, Greg Shailer, Brenton Fiedler
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