Kingston Limited bought an office building on 1 January 2015 for $60,000,000. The useful life of...

 

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Kingston Limited bought an office building on 1 January 2015 for $60,000,000. The useful life of the building was determined to be 40 years with an estimated residual value of $6,000,000. Depreciation is prorated on a monthly basis where relevant. On October 1, 2018 the company decided to rent the building to Portmore Limited for the next five years. At this date the property had a fair market value of $70,000,000. Currently the property is accounted for under IAS16 and after the rental is to be accounted for under IAS40, using the revaluation model. At 31 December 2018 the market value of the property is $72,000,000. a. Prepare Kingston Limited's Statement of Financial Position extract as at December 31, 2018 (5 marks) b. Prepare Kingston Limited's Statement of Comprehensive Income extract for the period ended December 31, 2018. (5 marks) c. Kingston Limited recorded a revaluation gain of $20 million on property accounted for under IAS16 in 2019, a year later a loss on revaluation of $25 million is recorded. How should this be treated in the books of Kingston Limited. (3 marks) Page 4 of 6 Kingston Limited bought an office building on 1 January 2015 for $60,000,000. The useful life of the building was determined to be 40 years with an estimated residual value of $6,000,000. Depreciation is prorated on a monthly basis where relevant. On October 1, 2018 the company decided to rent the building to Portmore Limited for the next five years. At this date the property had a fair market value of $70,000,000. Currently the property is accounted for under IAS16 and after the rental is to be accounted for under IAS40, using the revaluation model. At 31 December 2018 the market value of the property is $72,000,000. a. Prepare Kingston Limited's Statement of Financial Position extract as at December 31, 2018 (5 marks) b. Prepare Kingston Limited's Statement of Comprehensive Income extract for the period ended December 31, 2018. (5 marks) c. Kingston Limited recorded a revaluation gain of $20 million on property accounted for under IAS16 in 2019, a year later a loss on revaluation of $25 million is recorded. How should this be treated in the books of Kingston Limited. (3 marks) Page 4 of 6

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Step 1 A company can report its asset at historical cost or fair value when c... View the full answer