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hello
could you explain why use the fair value model the gain is 1000k? why the cost for sell does not need to be deducted?
“a company acquired a building with a 40-year life for its investment potential for 8 million on 1 January 20×3, at 31 December 20×3 the fair value of the property was estimated at 9 million with costs to sell estimated at 200k ”
thank you
Hi,
The cost at the acquisition date is $8 million and has risen to a fair value of $9 million at the reporting date, hence the gain of $1 million.
It is not necessary to account for the costs to sell as we revalue to fair value under IAS 40, and not the fair value less costs to sell, a figure you may have seen in another standard.
Thanks
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