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Financial Accounting And Reporting Ii I Need The Answer For A And C Only

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QUESTION 1
Two pieces of land in Semenyih and Puchong and also an eight-storey office building have been
acquired by Nayland Bhd on 1 July 2017, The cost of Semenyih land, Puchong land and office
building are RM3,500,000, RM4,000,000 and RM5,000,000, respectively. Puchong land was
acquired to construct Nayland’s warehouse while the office building was rented out to its
subsidiary company, Mayland Bhd at market rental rates. However, the management of Nayland
Bhd has not decided whether to use Semenyih land for expansion or sell it later when the price
goes up. It is estimated that the office building will evenly provide benefits to the company over
its useful life of 40 years. Nayland Bhd uses a revaluation model for plant, property and equipment
(PPE) and fair value model for its investment property. Nayland Bhd’s accounting year ends on
31 December each year. A professional appraiser has assessed the propertie’s market value for the
year end 2017 and 2018, as follows:
Property
Fair Value 2017
Fair Value 2018
(RM)
(RM)
Semenyih land
Roilon
3,300,000
ist to
2,500,000
Puchong land
4,000,000
4,050,000
Eight-storey office building
5,500,000
5,200,000
On 1 March 2019, Nayland Bhd occupied back the office building as their main office for
company’s operation. However, the building also partially rented out. The floor area rented out
was just a small portion of the overall office-building and its value could not be separately
identified. The fair value of an office building at the commencement date of occupied was
RM5,400,000.
REQUIRED:
(a)
Explain which property(ies) can be classified as investment property for Nayland Bhd
according to MFRS 140 Investment Property.
(b)
Prepare the related journal entries for Nayland Bhd’s investment property(ies) for the years
2017, 2018 and 2019.
(c)
Nayland’s office building was rented to its subsidiary, Mayland Bhd. Based on the MFRS
140 Investment Property, advice on the accounting treatment to record this office
building in company’s and group financial statement.Financial Accounting