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Hi,
Could you tell me why the $2m income on the exchange of assets is not deferred over the lifetime of the acquired PPE and its transferred directly to retained earnings in the year of acquisition?
Thanks
Hi,
The land that was exchanged was an investment property, so when it was exchanged it will have been revalued up to the $7m from the $5m thus giving a gain immediately of $2m through profit or loss before we then disposed of it in receipt of the building. We don’t treat it any differently due to the exchange.
Thanks
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