- This topic has 6 replies, 2 voices, and was last updated 9 years ago by
.
- Posts
Hi,
If foreign PPE held as an investment property by the year end becomes owner-occupied and revalued upwards, do I re-translate the non-monetary item to using spot rate when it was an investment property and retranslate the FV using the rate at the year end?
Also, because the class of PPE has changed, (i.e. investment property to owner occupied) do i still account for the revaluation loss and foreign exchange loss?
Am confused. 🙁
Yes
Yes
Have you found this in a question? Or are you creating problems of your own? (believe me, the examiner will present you with enough without you getting involved!)
You’re welcome
If this is part of a past exam question, why are you asking me? Why are you not looking at the printed solution?
??????
its the revision mock assessment, not a past paper so have not got access to the answers yet.
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)Hmmm. Can’t be looking for much for just 7 marks
But there’s all sorts of things in there, isn’t there?
foreign currency, exchange differences, non-capitalisable costs, fair values, treatment of revenues / expenses, depreciate or not depreciate
I suggest one sentence on each of those (+ one other if you can spot another)
- You must be logged in to reply to this topic.