STEPHANIE DEANNE E.

LUMAKANG INTERMEDIATE ACCOUNTING 1

Problem 22-1, page 610; Classic Company

Given:
Land held by the parent for undetermined use P 5,000,000
A vacant building owned by the parent and to be leased out 3,000,000
under an operating lease
Property held by a subsidiary, a real estate firm, in the 2,000,000
ordinary course pf business
Property held by the parent for use in production 4,000,000
Building owned by a subsidiary and for which the subsidiary 1,500,000
provides security and maintenance services to the lessees
Land leased by the parent to a subsidiary under an 2,500,000
operating lease
Property under construction for use as investment property 6,000,000
Land held for future factory site 3,500,000
Machinery leased out by the parent to an unrelated party 1,000,000
under an operation lease
Solution:
Land held by the parent for undetermined use P 5,000,000
A vacant building owned by the parent and to be leased 3,000,000
out under an operating lease
Building owned by a subsidiary and for which the 1,500,000
subsidiary provides security and maintenance services
to the lessees
Property under construction for use as investment 6,000,000
property
Total Investment Property P 15,500,000

Property held by a subsidiary, a real estate firm, P 2,000,000 Owner-occupied Property

in the ordinary course pf business
Property held by the parent for use in production 4,000,000 Owner-occupied Property
Land leased by the parent to a subsidiary under 2,500,000 Owner-occupied Property
an operating lease
Land held for future factory site 3,500,000 Owner-occupied Property
STEPHANIE DEANNE E. LUMAKANG INTERMEDIATE ACCOUNTING 1

Problem 22-2, page 611; Galore Company

2020

Cost Model Fair Value Model

Particulars Debit Credit Particulars Debit Credit
January 1 Investment Property P 50,000,000 Investment Property P 50,000,000
Cash 50,000,000 Cash 50,000,000

December Depreciation 1,800,000 Investment Property 5,000,000

31 Accumulated 1,800,000 Gain from change in fair 5,000,000
iiiiiidepreciarion iiiiiiivalue

2021
STEPHANIE DEANNE E. LUMAKANG INTERMEDIATE ACCOUNTING 1

Cost Model Fair Value Model

Particulars Debit Credit Particulars Debit Credit
December Depreciation 1,800,000 Loss from change in fair 2,000,000
31 value
Accumulated 1,800,000 Investment Property 2,000,000
iiiiiidepreciarion

2022
Cost Model Fair Value Model
Particulars Debit Credit Particulars Debit Credit
December Depreciation 1,800,000 Investment Property 7,000,000
31 Accumulated 1,800,000 Gain from change in fair 7,000,000
iiiiiidepreciarion iiiiiiivalue

Solution:
 Cost Model  Fair Value Model
Acquisition Cost P 50,000,000 Fair Value- December 31, 2020 P 55,000,000
Less: Residual value 5,000,000 Less: Acquisition Cost 50,000,000
Depreciable Amount P 45,000,000 Increase in Fair Value in 2020 P 5,000,000
Divided by Estimated useful life 25 years
Annual Depreciation P 1,800,000 Fair Value- December 31, 2021 P 53,000,000
Less: Carrying Amount- December 31,2020 55,000,000
Decrease in Fair Value in 2021 (P 2,000,000)

Fair Value- December 31, 2022 P 60,000,000

Less: Carrying Amount- December 31,2021 53,000,000
Increase in Fair Value in 2022 P 7,000,000