Given below are three independent situations. For each situation, discuss whether A Berhad, B Berhad and...
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Given below are three independent situations. For each situation, discuss whether A Berhad, B Berhad and C Berhad have to recognize an investment property in accordance with MFRS 140 Investment Property. Justify your answer. a) A Berhad, a manufacturing company, purchased a 30-hectare land in Gong Badak, Terengganu. In the recent board meeting, the directors have agreed that the company will neither use the land nor sell the land for short term gain. Since Gong Badak is expected to be a developed area in 10 years' time, the directors have decided that the land will be held for long term capital appreciation. b) B Berhad acquired a newly-built 15-storey office building in Kuala Nerus, Terengganu. The office building is currently not being used in the operation of B Berhad and is not rented to any tenants. However, B Berhad has already received various offers from potential tenants and has planned to lease the building under an operating lease. c) C Berhad is a food manufacturer in Terengganu that has recently acquired a manufacturing building. The building is used for running its own business. However, some spaces in the building are rented to D Berhad. For C Berhad, the portion being rented to D Berhad cannot be classified separately and is considered insignificant. I Given below are three independent situations. For each situation, discuss whether A Berhad, B Berhad and C Berhad have to recognize an investment property in accordance with MFRS 140 Investment Property. Justify your answer. a) A Berhad, a manufacturing company, purchased a 30-hectare land in Gong Badak, Terengganu. In the recent board meeting, the directors have agreed that the company will neither use the land nor sell the land for short term gain. Since Gong Badak is expected to be a developed area in 10 years' time, the directors have decided that the land will be held for long term capital appreciation. b) B Berhad acquired a newly-built 15-storey office building in Kuala Nerus, Terengganu. The office building is currently not being used in the operation of B Berhad and is not rented to any tenants. However, B Berhad has already received various offers from potential tenants and has planned to lease the building under an operating lease. c) C Berhad is a food manufacturer in Terengganu that has recently acquired a manufacturing building. The building is used for running its own business. However, some spaces in the building are rented to D Berhad. For C Berhad, the portion being rented to D Berhad cannot be classified separately and is considered insignificant. I
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a The property will be classified as an investment property as it has been dec... View the full answer
Related Book For
Financial accounting
ISBN: 978-1118285909
IFRS Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
Posted Date:
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