Kuntum Bhd purchased a building for investment purposes on 1 April 2010. The company adopts...
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Accounting
Kuntum Bhd purchased a building for investment purposes on 1 April 2010. The company adopts the fair value model for its investment property. Due to the company's expansion programme, more office space was required and the building was used for the company operation with effect from 1 April 2020. The fair value of the building on the date of transfer was RM62,000,000, with a remaining useful life of ten years. Kuntum Bhd adopted the revaluation model for its buildings. At the year ended 30 September 2020, the fair value of the building was RM64,000,000.
Required:
a)
Under what circumstances can the above mentioned property are classified as an investment property.
(3marks)
b)
Justify the appropriate accounting treatment for the building.
(4 marks)
c)
Show the relevant journal entries to record the above transactions as at 30 September 2020.
(6 marks)
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