Jovi Real Estate Ltd. (Jovi) is a property development company in Malaysia. In 2013, Jovi acquired two plots of land in Kuala Lumpur for hotel development.

Property 1: Since the date of the land acquisition, Jovi's directors have decided to run their own hotel business. The hotel pre-operation activities began on January 1, 2015, when the development was completed and the hotel was available according to the intended use. The hotel grand opening took place on 1 July 2015.

Property 2: Since the date of land acquisition, Jovi's directors have decided to lease out the property to obtain rental fees. The lease agreement was entered into with Golden Ltd for a period of 18 years to operate as a hotel. Based on the rental agreement, in addition to the annual rental fee, Jovi will receive 5% of the annual revenue from the hotel operations. Other information about the two properties is:

	Property 1 RM ‘000	Property 2 RM ‘000
Cost of land	45.000	80.000
Construction costs	303.000	267.000
Fair value of land as of December 31, 2015	60.000	100.000
Fair value of building as of December 31, 2015	560.000	340.000
The date of purchase of land	1 July 2013	1 October 2013
Estimated useful life of the property	25 years	20 years
Construction completion date	December 2014	June 2015

Jovi adopts the cost model: Fixed assets and fair value model: Investment property (only for buildings). Depreciation uses the straight-line method.

Instructions:

a. Make calculations and presentations in the statement of financial position for (a) land and (b) buildings for each property in Jovi's statement of financial position as of December 31, 2015.

b. Explain whether Jovi's application of accounting standards is correct for both properties?