On January 1, 2015, Schielanie company acquired a building to be held as investment property in a remote location for 7,500,000. After initial recognition, the entity measured the investment property using the cost model because the fair value cannot be measured reliably. On December 31, 2015, management assessed the building’s useful life at 50 years from the date of acquisition and presumed the residual value to be nil because the fair value cannot be determined reliably. At year end, the entity declined an unsolicited offer to purchase the building for 9,750,000. This is a one time offer that is unlikely to be repeated in the foreseeable future. What is the carrying amount of the building on December 31, 2015?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2015, Schielanie company acquired a building to be held as investment property in a remote location for 7,500,000. After initial recognition, the entity measured the investment property using the cost model because the fair value cannot be measured reliably. On December 31, 2015, management assessed the building’s useful life at 50 years from the date of acquisition and presumed the residual value to be nil because the fair value cannot be determined reliably. At year end, the entity declined an unsolicited offer to purchase the building for 9,750,000. This is a one time offer that is unlikely to be repeated in the foreseeable future. What is the carrying amount of the building on December 31, 2015?

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