INVESTMENT PROPERTY

Carter Co vacated its head office building and let it out to a third party on 30 June 20X8. The building had an
original cost of $900,000 on 1 January 20X0 and was being depreciated over 50 years. It was judged to have
a fair value on 30 June 20X8 of $950,000. At the year-end date of 31 December 20X8 the fair value of the
building was estimated at $1.2 million.
Carter Co uses the fair value model for investment property.
What amount will be shown in revaluation surplus at 31 December 20X8 in respect of this building?
Prior to 30 June 20X8, the building was property, plant and equipment and was accounted for under IAS 16.
When the building was leased, it was transferred to an investment property, and so is accounted for under
IAS 40. IAS 40 requires that assets must be transferred across at the fair value of the date of transfer
($950,000 in the question). The credit will go to the revaluation surplus.
$
Cost 1.1.X0 900,000
Depreciation to 30.6.X8 (900,000 × 8.5 / 50) (153,000)
Carrying amount 30.6.X8 747,000
Revaluation surplus 203,000
Fair value 30.6.X8 950,00
*SIR I HAVE AN ISSUE IN THIS QUESTION … THAT WHY USE 8.5 YEARS TO CALCULATE DEPRECIATION ??? I THINK WE SHOULD USE 8.6 TILL 3 JUNE 20X8??
THANKS