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Overseas property

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Overseas property

  • This topic has 1 reply, 2 voices, and was last updated 11 months ago by Stephen Widberg.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • February 14, 2022 at 5:18 am #648574
    Aspirant101
    Member
    • Topics: 5
    • Replies: 10
    • ☆

    Bubble wished to expand its overseas operations and on 1 May 20X5 acquired an overseas
    property with a fair value of 58.5 million dinars. In exchange for the building, Bubble paid
    the supplier with land which Bubble had held but for which it had yet to determine its use.
    The carrying amount of the land was $5 million but it had an open market value of $7
    million. Bubble was unsure as to how to deal with this transaction and so has transferred $5
    million from investment properties to property, plant and equipment. The transaction has
    commercial substance.
    In the answer ,they’ve given that the correcting entry is
    Dr PPE $2m
    Cr P/L $2m

    But I was thinking that
    Since a wrong entry was passed which is
    DrPPE 5m
    Cr Inv property 5m

    THe correcting entry should be
    Dr Inv property 5m
    Cr Ppe 5m
    and then another entry to bring the asset to fair value
    Dr inv 2
    Cr p/l 2

    Please help me regarding this.

    February 14, 2022 at 9:08 am #648587
    Stephen Widberg
    Keymaster
    • Topics: 12
    • Replies: 2842
    • ☆☆☆☆☆

    The new building is part of the operations – not an IP, so it is correctly classified as PPE.

    In the exam don’t use journals instead of explanations.

    🙂

  • Author
    Posts
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