question archive On 1 January 2019, Alfalfa Bhd acquired a building for rental to third parties
On 1 January 2019, Alfalfa Bhd acquired a building for rental to third parties
Subject:AccountingPrice: Bought3
On 1 January 2019, Alfalfa Bhd acquired a building for rental to third parties. The cost of purchase was RM1,500,000 (exclude legal cost of RM75,000) with an estimated economic life of 30 years. For the subsequent measurement of the building, the company adopts revaluation model for its property, plant and equipment and fair value model for its investment property. The fair value of the building as at 31 December 2019 was RM2,500,000 and at 31 December 2020 was RM2,000,000. Required: a. Discuss the appropriate accounting treatment for the building above for the years ended 31 December 2019 and 31 December 2020 in accordance with relevant MERS. (6 marks) b. Assuming that on 31 December 2020, Alfalfa Bhd decided to rent out the building to its own employees and charged rental below the market price. Discuss the appropriate accounting treatment for the change in use of building on 31 December 2020 in accordance with the relevant MFRS. (4 marks) (Total: 10 marks)
