Lany Co. owned three properties which are classified as investment properties. Details of theproperties are as follows:Property 1Property 2Property 3Initial Cost2,700,0003,450,0003,300,000Fair ValueDec. 31, 20223,200,0003,050,0003,850,000Fair ValueDec. 31, 20233,500,0002,850,0003,600,000Each property was acquired at the beginning of 2017 with a useful life of 25 years and noresidual value.Required:1. Assuming the company elects to use the cost model, compute the total book value of theinvestment properties as of December 31, 2023.2. Assuming the company elects to use the fair value model, compute the net gain (loss)due to changes in fair value during 2023.

The cost method of determining the book value of an asset indicates the purchase cost of asset(s)…

Answered: Lany Co. owned three properties which…

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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Dayanara Company owns three properties which are classified as investment properties. Details of the properties are as follows: Initial Cost Fair Value 12/31/2019 Fair Value 12/31/2020 Property 1 2,700,000 3,200,000 3,500,000 Property 2 3,450,000 3,000,000 2,280,000 Property 3 3,300,000 3,900,000 3,400,000 Each property had an estimated useful life of 25 years. The entity’s 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 for the year ended December 31,2020 in the statement of financial position?
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SEASH, Inc. acquired an office building, land, and equipment in a single basket purchase. The fair values were $2,400,000, $1,200,000, and $400,000 for the building, land, and equipment, respectively. The company recorded the building for $2,160,000. What was the total purchase cost for all three assets? Select one: a. $3,400,000 b. $3,600,000 c. $3,200,000 d. $3,800,000 e. $4,000,000
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