M Ltd reported an investment property at $950,000 on its statement of financial position last year....

   

Transcribed Image Text:

M Ltd reported an investment property at $950,000 on its statement of financial position last year. The company measures the property at fair value under NZ IAS 40 Investment Property. To comply with IAS 40, the company must estimate the fair value at the end of the current year. Currently, the company rents it to a tenant at a weekly rent of $800. The property is comprised on land and a building on it. The property has fences on three sides. The building was built 50 years ago, but it is well-maintained. The property is near a college and Shops. The burglary rate in this area is higher than the Auckland average. Here are other details of the property: Land size: 900 square meters Size of the building: 200 square meters Number of bed-rooms: 4 Store-room: 1 Lounge: 11 Kitchen: 1 Number of showers and bathrooms: 2 Garage: A carport 1 Requirements: 1. Estimate the fair value of this property. 2. Document the assumptions and inputs you used because the auditor will verify the assumptions and inputs when they audit the financial statements. 3. Disclose in financial statement notes the estimates and judgments used in estimating the fair value of the property. M Ltd reported an investment property at $950,000 on its statement of financial position last year. The company measures the property at fair value under NZ IAS 40 Investment Property. To comply with IAS 40, the company must estimate the fair value at the end of the current year. Currently, the company rents it to a tenant at a weekly rent of $800. The property is comprised on land and a building on it. The property has fences on three sides. The building was built 50 years ago, but it is well-maintained. The property is near a college and Shops. The burglary rate in this area is higher than the Auckland average. Here are other details of the property: Land size: 900 square meters Size of the building: 200 square meters Number of bed-rooms: 4 Store-room: 1 Lounge: 11 Kitchen: 1 Number of showers and bathrooms: 2 Garage: A carport 1 Requirements: 1. Estimate the fair value of this property. 2. Document the assumptions and inputs you used because the auditor will verify the assumptions and inputs when they audit the financial statements. 3. Disclose in financial statement notes the estimates and judgments used in estimating the fair value of the property.

Answer rating: 100% (QA)

1 To estimate the fair value of the property we need to consider the following methods a Comparable Sales Approach This approach involves looking at r... View the full answer