How much should be reported as property, plant and equipment?

2. How much should be recognized in profit or loss regarding the increase in fair value of investment properties?

3. How much is the total expenses to be recognized in profit or loss?

4. Assume that the fair value of the units cannot be determined reliably without undue cost or effort on an ongoing basis, how much is the total expense to be recognized in profit or loss?

 

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Charlie Corporation, a real estate entity, has total assets of not more than 350 million and total liabilities of not more than 250 million. Charlie's debt and equity instruments are not traded in a public market. Charlie Corporation incurred (and paid) the following expenditures in acquiring property consisting of ten identical freehold detached houses each with separate legal title including the land on which it is built: Date 1 Jan. 2020 1 Jan. 2020 1 Jan. 2020 1 Jan. 2020 1 Jan. 2020 2 Jan. 2020 30 June 2020 Amount (in Php) Throughout 2020 200,000,000 20,000,000 1,000,000 10,000 500,000 200,000 Non-refundable annual local government property taxes for the year ending 30 June 2021. Day-to-day repairs and maintenance, including the salary and other costs of the administration and maintenance staff. These costs are attributable equality to each of the ten units. The entity uses one of the ten units to accommodate its administration and maintenance staff. The other nine units are rented to independent third parties under non-cancellable operating leases. 20,000 Additional information 20 per cent of the price is attributable to the land Non-refundable transfer taxes (not included in the 200,000,000 purchase price) Legal cost directly attributable to the acquisition Reimbursing the previous owner for prepaying the non- refundable local government property taxes for the six-month period ending 30 June 2020 120,000 Advertising campaign to attract tenants Opening function to celebrate new rental business that attracted extensive coverage by the local press At 31 December 2020, the entity made the following assessments about the units: • Useful life of the buildings: 50 years from the date of acquisition • The entity will consume the buildings' future economic benefits evenly over 50 years from the date of acquisition. The fair value of the units can be determined reliably without undue cost or effort on an ongoing basis and that the residual value of the owner-occupied unit is nil. On 31 December 2020, the fair value of each unit was reliably estimated as P 25,000,000. Charlie Corporation, a real estate entity, has total assets of not more than 350 million and total liabilities of not more than 250 million. Charlie's debt and equity instruments are not traded in a public market. Charlie Corporation incurred (and paid) the following expenditures in acquiring property consisting of ten identical freehold detached houses each with separate legal title including the land on which it is built: Date 1 Jan. 2020 1 Jan. 2020 1 Jan. 2020 1 Jan. 2020 1 Jan. 2020 2 Jan. 2020 30 June 2020 Amount (in Php) Throughout 2020 200,000,000 20,000,000 1,000,000 10,000 500,000 200,000 Non-refundable annual local government property taxes for the year ending 30 June 2021. Day-to-day repairs and maintenance, including the salary and other costs of the administration and maintenance staff. These costs are attributable equality to each of the ten units. The entity uses one of the ten units to accommodate its administration and maintenance staff. The other nine units are rented to independent third parties under non-cancellable operating leases. 20,000 Additional information 20 per cent of the price is attributable to the land Non-refundable transfer taxes (not included in the 200,000,000 purchase price) Legal cost directly attributable to the acquisition Reimbursing the previous owner for prepaying the non- refundable local government property taxes for the six-month period ending 30 June 2020 120,000 Advertising campaign to attract tenants Opening function to celebrate new rental business that attracted extensive coverage by the local press At 31 December 2020, the entity made the following assessments about the units: • Useful life of the buildings: 50 years from the date of acquisition • The entity will consume the buildings' future economic benefits evenly over 50 years from the date of acquisition. The fair value of the units can be determined reliably without undue cost or effort on an ongoing basis and that the residual value of the owner-occupied unit is nil. On 31 December 2020, the fair value of each unit was reliably estimated as P 25,000,000.