Questions and Answers
What is the total initial cost of the properties mentioned?
What amount will be charged to the profit or loss for the year ended 31 March 2017?
How much of the total initial cost is attributed to the land component?
Which component represents the largest portion of the initial cost?
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What is the status of the profit or loss figure mentioned in the document?
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Study Notes
IAS (40) Investment Property Overview
- Investment property refers to land or buildings held to earn rentals or for capital appreciation.
- Under IAS 40, investment properties are measured at cost less accumulated depreciation and any impairment losses.
Key Components of the Building
- Top three floors of the building are classified separately as a component of the overall investment.
- Remainder of the building is divided into:
- Buildings component valued at 20.
- Land component valued at 25.
Financial Aspects
- Total initial cost for the investment property is recorded at 60.
- Profit or loss for the year ending 31 March 2017 reflects an amount of $2 million.
- Depreciation expense for 2017 is calculated at $400,000, derived from $20 million allocated over a 50-year useful life.
Reporting Requirements
- Depreciation charge is recognized in the profit or loss section of the financial statement.
- Relevant financial position information must be accurately presented to reflect the net asset value of the investment property.
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Description
Test your knowledge on IAS 40 Investment Property as covered in the ACCA Diploma in IFRS. This quiz includes questions from the June 2017 exam, allowing you to explore key concepts and application in financial statements and profit recognition. Prepare for your ACCA exams with these challenging questions!
