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Croft acquired a building with a 40?year life for its investment potential for $8 million on 1
January 20X3 At 31 December 20X3, the fair value of the property was estimated at $9 million
with costs to sell estimated at $200,000.
If Croft Co uses the fair value model for investment properties, what gain should be
recorded in the statement of profit or loss for the year ended 31 December 20X3?
$_______________ ,000Dear Sir,please help to clarify this issue
at 31-dec-2013
Carrying amount 7.8 million
and revaluation= 9million
surplus 1.2 million general gain
but
this question doesn’t ask net gainwhy answer is 1 million?
Hi,
The IP is revalued to fair value (the costs to sell are ignored) of $9 million. If it was originally recognised at $8 million then there is an increase of $1 million.
The costs to sell are given so as to trick you in to thinking that they are to be used when they aren’t.
Thanks
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