Part A Purnama Biru Bhd operates in the telecommunication industry since 2015. On 1 January 2017,...

 

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Part A Purnama Biru Bhd operates in the telecommunication industry since 2015. On 1 January 2017, the company bought a property comprising a land and a 12-storey office buildings for RM25 million. On the date of purchase, the cost of the land was RM5 million. Nine floors of the building were rented out to external parties such as retailers, while the remaining 3 floors were used by Purnama Biru Bhd for their business operations. The building is estimated to have 30 years useful life with a salvage value of RM2 million. On 1 January 2019, the fair value of the land is RM7 million and the building RM13 million. repectively. On 1 January 2020, the tenancy of the building with the external parties was terminated and Purnama Biru Bhd has leased out all the seven floors to its subsidiary. Bintang Supplies Sdn Bhd. Purnama Biru Bhd continues using the remaining three floors for its business operation. The fair value of the land and building on 1 January 2020 are RM7.5 million and RM22 million, respectively. The company used fair value model to measure its investment property. Required: a) Illustrate the accounting treatment for the land and building from 2017 until 2020 in accordance to the requirement of the MFRS 140 Investment Property. (4 marks) b) Prepare the journal entries to record the above transactions from 2017 until 2020. (7marks) Part A Purnama Biru Bhd operates in the telecommunication industry since 2015. On 1 January 2017, the company bought a property comprising a land and a 12-storey office buildings for RM25 million. On the date of purchase, the cost of the land was RM5 million. Nine floors of the building were rented out to external parties such as retailers, while the remaining 3 floors were used by Purnama Biru Bhd for their business operations. The building is estimated to have 30 years useful life with a salvage value of RM2 million. On 1 January 2019, the fair value of the land is RM7 million and the building RM13 million. repectively. On 1 January 2020, the tenancy of the building with the external parties was terminated and Purnama Biru Bhd has leased out all the seven floors to its subsidiary. Bintang Supplies Sdn Bhd. Purnama Biru Bhd continues using the remaining three floors for its business operation. The fair value of the land and building on 1 January 2020 are RM7.5 million and RM22 million, respectively. The company used fair value model to measure its investment property. Required: a) Illustrate the accounting treatment for the land and building from 2017 until 2020 in accordance to the requirement of the MFRS 140 Investment Property. (4 marks) b) Prepare the journal entries to record the above transactions from 2017 until 2020. (7marks)

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a i On January 1 2017 the company bought a property comprising land and a 12story office building fo... View the full answer