Tagish Ltd. is a small public company located in eastern Canada. Tagish's management has decided to report
Question:
Tagish Ltd. is a small public company located in eastern Canada. Tagish's management has decided to report its land and building at fair value as allowed by IFRS for its December 31, 2018 year-end. The land was acquired 15 years ago for $4,000,000. The building was built six years ago at a cost of $12,000,000. The building is being depreciated over 25 years on a straight-line basis with a residual value of zero. A recent appraisal valued the land at $7,500,000 and the building at $10,500,000. Assume that Tagish's net income for 2018 was $5,750,600 and common shares and retained earnings on December 31, 2018 were $10,000,000 and $15,000,000 respectively.
Required:
a. What amount would Tagish report on its December 31, 2018 balance sheet for land and building if it carries them at fair value?
a. What amount would Tagish report on its December 31, 2018 balance sheet for land and building if it carries them at fair value?
b. If Tagish uses the proportional method to present its capital assets, what would be the balance in the accumulated depreciation account for the building on December 31, 2018?
c. How would the change in the value of the land and building be reported in the statement of income and comprehensive income and balance sheet in 2018?
d. What do you think the benefits and problems for stakeholders are of a company reporting its capital assets at market value?
Stakeholders
A person, group or organization that has interest or concern in an organization. Stakeholders can affect or be affected by the organization's actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees,... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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a The carrying amount for land and building would be 7500000 and 10500000 respectively b The balance ...View the full answer
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