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- December 11, 2021 at 11:16 pm #643986qilianmParticipant
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Q: Carter Co vacated an office building and let it out to a third party on 30 June 20×8. The building had an original cost of $900,000 on 1 Janauary 20×0 and was being depreciated over 50 years. It was judged to have a fair value on 30 June 20×8 of $950,000. At the year-end date of 31 Decemeber 208 the fair value of the building was estimated at $1.2 million.
Carter Co uses the fair value model for investment property.
What amound will be shown in revaluation surplus at 31 Decemebr 20×8 in respect of building?
I am not sure why the increase between 30.6.×8 and 31.12.×8 will be credited to profit or loss when the increase between 01.01.×8 will be shown in the revaluation surplus.December 27, 2021 at 8:23 pm #644931P2-D2Keymaster
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It is because there is a change in use of the property. It was originally PPE when it was being used as an office building. Once they had vacated the building a started to lease it out then it became investment property.
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