Page 410 - SBR Integrated Workbook STUDENT S18-J19
P. 410
Chapter 25
Example 4
Building
The building is an investment property, rather than PPE, because it is held for
capital appreciation.
Investment properties are initially recognised at cost plus directly attributable
fees. If subsequently held under the fair value, the property should not be
depreciated.
The depreciation charged in the year should be reversed and the building
should be reclassified as an investment property
Dr Investment property ($10m + $0.1m) $10.1m
Cr PPE $9.5m
Cr Profit or loss ($0.5m depn + $0.1m fees) $0.6m
The investment property should be revalued to its fair value of $11 million at
the year end. A gain of $0.9 million ($11m – $10.1m) is recorded in profit or
loss.
Dr Investment property $0.9m
Cr Profit or loss $0.9m
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