Question: Company B is constructing a property for future use as investment property. B applies the fair value model Previously the company was using the cost

Company B is constructing a property for future use as investment property. B applies the fair value model Previously the

company was using the cost model under IAS40

Now the company is changing to fair value mode. 1 July 20x6 the carrying amount of the property is 750 and the fairvalue of the property is AED 1,000. During the year end 30 June 20x7 company capitalizes maintenance costs of AED 400and borrowing cost of AED 100. Now the carrying cost is AED 1,250. The fair value of the property at 30 June 20x7 isAED 1,400.

Calculate the gain or loss

A. 650

B. 150

C. 550

Why the answer is 650, not 150? what is the basis of the calculation?

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