On January 1, 2022, Estrime Company purchases an investment property at a cost of P50,000,000 including transaction costs. On October 1, 2022, the fair value of property increases to P51,000,000. At December 31, 2022 the fair value of property is P47,000,000. The rental income received per quarter is P1,550,000. The property has a useful life of 50 years. If the company uses the cost model, what is the net effect on the profit or loss for the year ended December 31, 2022 in relation to the investment property? If the company uses the fair value model, what is the net effect on the profit or loss for the six months ended December 31, 2022 in relation to the investment property?
On January 1, 2022, Estrime Company purchases an investment property at a cost of P50,000,000 including transaction costs. On October 1, 2022, the fair value of property increases to P51,000,000. At December 31, 2022 the fair value of property is P47,000,000. The rental income received per quarter is P1,550,000. The property has a useful life of 50 years. If the company uses the cost model, what is the net effect on the profit or loss for the year ended December 31, 2022 in relation to the investment property? If the company uses the fair value model, what is the net effect on the profit or loss for the six months ended December 31, 2022 in relation to the investment property?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 14P: Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used...
Related questions
Question
100%
On January 1, 2022, Estrime Company purchases an investment property at a cost of P50,000,000 including transaction costs. On October 1, 2022, the fair value of property increases to P51,000,000. At December 31, 2022 the fair value of property is P47,000,000. The rental income received per quarter is P1,550,000. The property has a useful life of 50 years.
If the company uses the cost model, what is the net effect on the profit or loss for the year ended December 31, 2022 in relation to the investment property?
If the company uses the fair value model, what is the net effect on the profit or loss for the six months ended December 31, 2022 in relation to the investment property?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College