An entity purchased an office building with a useful life of 50 years for GHC5.5 million on 1 January 2006. (The amount attributable to land was negligible). The entity used the building as its head office for five years until 31 December 2010, when the entity moved its business into larger premises. The building was reclassified on that date as an investment property and leased under a 40-year lease. The fair value of the head office at 31 December 2010 was GHC6 million. Explain the treatment of the office building on the assumption that the entity uses the fair value model for investment properties
An entity purchased an office building with a useful life of 50 years for GHC5.5 million on 1 January 2006. (The amount attributable to land was negligible). The entity used the building as its head office for five years until 31 December 2010, when the entity moved its business into larger premises. The building was reclassified on that date as an investment property and leased under a 40-year lease. The fair value of the head office at 31 December 2010 was GHC6 million. Explain the treatment of the office building on the assumption that the entity uses the fair value model for investment properties
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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An entity purchased an office building with a useful life of 50 years for GHC5.5 million on 1 January 2006. (The amount attributable to land was negligible). The entity used the building as its head office for five years until 31 December 2010, when the entity moved its business into larger premises. The building was reclassified on that date as an investment property and leased under a 40-year lease. The fair value of the head office at 31 December 2010 was GHC6 million. Explain the treatment of the office building on the assumption that the entity uses the fair value model for investment properties
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