prepare the journal entries under IFRS, show your calculation please On April 13
ID: 2429556 • Letter: P
Question
prepare the journal entries under IFRS, show your calculation please
On April 13, 2017, Splish Ltd. purchased a small apartment building with eight suites. The building qualified as an investment property under IAS 40. At the time of purchase, six out of the eight suites were rented. Splish paid the following items at the time of its acquisition of the apartment building (all items were paid in cash except for the building itself, for which Splish took out a mortgage):
In addition, the previous owner of the apartment building paid Splish $11,000 for damage deposits from the existing tenants.
On December 31, 2017, the apartment building had a fair value of $4,191,000. On December 31, 2018, it was determined that the apartment building had a fair value of $3,991,000.
Assuming that Splish follows IFRS, prepare the journal entries required to record the above events. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record entries in the order presented in the problem.)
Explanation / Answer
Journal entries required to record the events 13-Apr-17 Investment Property-Building $4,036,000 Advertising expenses $2,000 Cash $11,000 Cash $38,000 Mortgage payable $4,000,000 Damage Deposit $11,000 (Legal fee, property transfer fees are associated with building thus capitalized) Painting the empty apartment will increase the value of building, thus capitalized Advetising is an operating expense 31-Dec-17 Investment Property $155,000 Gain on fair value adjustment $155,000 31-Dec-18 Loss on fair value adjustment $200,000 Investment Property $200,000
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