Cabarroguis, Inc., a real estate company, has a property included in its inventory with a cost of
Question:
Cabarroguis, Inc., a real estate company, has a property included in its inventory with a cost of P 15,650,000 and net realizable value of P 8,540,000 on December 31, 2020. Because of the decline in the real estate industry, the company decided to lease out the property to a tenant under an operating leas in 2020 when the fair value of the property was P 9,727,000.
1. If the company will use the cost model to measure the investment property, how much should be recognized in the 2020 income statement as a result of the transfer form the inventory to investment property?
2. If the company will use the fair model to measure the investment property, how much should be recognized in the 2020 income statement as a result of the transfer form the inventory to investment property?
Expert Answer:
1 If Cabarroguis Inc will use the cost model to measure the investment property the transfer from in... View the full answer
