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yes I noticed the 1st post mysteriously disappeared, before I could read ur reply
This helps! Thank you.
its the revision mock assessment, not a past paper so have not got access to the answers yet.
Here is the full question:
Glaze is a company that prepares its financial statements in accordance with International Financial Reporting Standards. Its functional currency is the dollar ($). It is currently preparing financial statements for the year ended 31 March 2015
On 1 October 2014, Glaze purchased a property overseas with the aim of earning rental income. Glaze measures assets at fair value whenever permitted by an accounting standard. Glaze provides the tenants of this particular property with ancillary services, such as security and maintenance, but these were deemed to be insignificant to the arrangement as a whole. Total expenditure on the property was MK2.5 million.
A breakdown of this amount is provided below:
MKm
Purchase price 1.5
Recoverable sales tax 0.3
Legal fees 0.5
Allocated administrative overheads 0.2
––––
2.5
––––Glaze expects the building to have a useful life of approximately 50 years. On 31 March 2015, when the fair value of the property was MK3.0 million, Glaze agreed to increase the level of ancillary services offered to its tenant, causing them to constitute a significant part of the overall arrangement. Currency rates during the year were as follows:
MK: $1 1 October 2014 1.8 31 March 2015 1.5The directors wish to know how the property should be accounted for in the year ended 31 March 2015.
Required:
Discuss the correct accounting treatment of the above transactions for the year ended 31 March 2015 (7 marks)its the revision mock assessment, not a past paper so have not got access to the answers yet.