Answered: Fair Value Fair Value Initial Cost…

Fair Value Fair Value Initial Cost Property 1 Property 2 Property 3 P2,700,000 3,450,000 3,300,000 December 31, 2019 P 3,200,000 3,000,000 3,900,000 December 31, 2020 P 3,500,000 2,800,000 3,400,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Real Estate

Real estate means ownership of land along with the assets and natural resources that exist on the land. These properties are in real/physical form which is tangible. Real estate simply means land or addition made to land permanently like constructing a residence or different buildings. People invest in real estate to either reside or for wealth creation. Many people investing in real estate further lend the place for occupation or businesses in return for a monthly payment.

Question

Each property had an estimated useful life of 50 years. The accounting policy is to use the fair value model for investment properties. What is the carrying value of the investment properties that should be presented in the 2020 statement of financial position?

Fair Value
Fair Value
Initial Cost
December 31, 2019
December 31, 2020
P 2,700,000
P 3,200,000
Property 1
Property 2
Property 3
P 3,500,000
2,800,000
3,400,000
3,450,000
3,000,000
3,300,000
3,900,000

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