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Far Week 6 Investment Properties Reviewees
Far Week 6 Investment Properties Reviewees
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Five-star hotel owned and managed by the company 5,500,000
How much should be classified as investment property in the company’s December 31,
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2021, statement of financial position?
a. P8,500,000
b. P11,500,000
c. P12,500,000
d. P17,000,000
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2. How much should be classified as owner-occupied property in the company’s December
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31, 2021, statement of financial position?
a. P11,500,000
b. P17,000,000
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c. P22,000,000
d. P32,500,000
b. P5,000,000
c. P8,500,000
d. P9,750,000
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b. P11,500,000
c. P11,000,000
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d. P15,500,000
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intended for future use as investment property for a total cost P15,000,000. The estimated
useful life of the property was 50 years using a straight-line method and the residual
value is 10%. The fair values and the costs to sell of the property follow:
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Date Fair Value Cost to sell
December 31, 2019 P14,950,000 200,000
December 31, 2020 P14,450,000 225,000
December 31, 2021 P14,475,000 175,000
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8. What was the carrying value of the investment at the end of 2021 using the cost model?
a. P14,325,000
b. P14,190,000
c. P14,150,000
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d. P12,690,000
9. What was the carrying value of the investment at the end of 2021 using the fair value
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model?
a. P14,4750,000
b. P14,190,000
c. P14,300,000
d. P14,015,000
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10. What amount of gain from change in fair value was recognized in 2021 profit or loss if
the investment is accounted for using the fair value model?
a. P25,000
b. P75,000
c. P110,000
d. P285,000
11. If the investment property was carried under cost model, and it was sold on December 31,
2021, at its fair value, what was the gain or loss on sale?
a. P285,000 gain
b. P285,000 loss
c. P110,000 gain
d. P110,000 los
12. On January 3, 2020, a company acquired an investment property for P5,000,000. The
estimated useful life of the property was 25 years and it was depreciated using straight-
line method. On the date of acquisition, the company decided to account this investment
under the fair value model. On December 31, 2020, the property had a fair value of
P5,400,000. On December 31, 2021, the investment was reclassified to owner-occupied
property when the fair value of the investment property was P5,250,000. What would be
the initial cost of the owner-occupied property on transfer date?
a. P4,600,000
b. P4,800,000
c. P5,250,000
d. P5,400,000
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a. recognize a gain of P1,100,000 in profit or loss
b. recognize a revaluation surplus of P1,100,000 in other comprehensive income
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c. recognize a gain of P1,100,000 in retained earnings
d. record a gain of P1,100,000 in the notes
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14. Which of the following is not included in the cost of investment property?
a. Costs incurred initially to acquire an investment property.
b. Costs incurred subsequently to add to or replace part of the investment property.
c. Costs incurred subsequently to service the investment property (other than day-to-
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day servicing).
d. All of the above are included in the cost of investment property.
15. An entity acquired an investment property in exchange for another non-monetary asset.
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The exchange lacks commercial substance, but the fair values of both assets are reliably
measurable. In this case, how should the investment property be measured?
a. Fair value of the investment property
b. Fair value of the non-monetary asset
c. Carrying value of the investment property
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16. An entity had two investment properties: a self-constructed building, and a vacant lot
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held as a right-of-use asset. Which of the following statements is true in relation to the
subsequent measurement of these investment properties?
a. An entity may choose to measure the building using the fair value model while the
vacant lot using the cost model.
b. If the entity will choose the fair value model, both the building and lot should be
measured using the fair value model.
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c. If the entity will choose the cost model, both the building and lot should be measured
applying the provisions of IAS 16 for the cost model.
d. Only b and c are correct.
17. An owner-occupied property occupied by employees who, in return, pay rent at market
rates, is classified as
a. investment property.
b. owner-occupied property.
c. asset held for sale.
d. Extraordinary asset.
19. For a transfer from investment property carried at fair value to owner-occupied property
or inventories, the property’s deemed cost for subsequent accounting shall be
a. the fair value at the date of change in use.
b. the cost.
c. the book value at the date of change in use.
d. the depreciated replacement cost at the date of change in use.
20. In accounting for investment property accounted for using the fair value model, an
equipment such as air-conditioning unit which is an integral part of a building
(investment property), is reported
a. as part of the investment property.
b. separately as building equipment.
c. separately as building improvement.
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d. none of the above.
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END OF HANDOUT
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