12. On 31 March 20X5 DD Limited purchased a building which it intended to hold f

Question

12. On 31 March 20X5 DD Limited purchased a building which it intended to hold for capital appreciation for $1 million. On the purchase date it was unclear what the fair value of the building was. By 31 March 20x6, due to a boom in the property industry, the fair value of the building was estimated to be $15 million. Required: Calculate the carrying amount of the investment property on the 31 March 20X 5 and 20x6; assuming the following: The company's accounting policy is to carry investment property at fair value, and Buildings are depreciated over a useful life of 20 years

Explanation / Answer

Carrying value of the investment property (Building) on Mar 31, 20X5 1000000 (Purchase date-- reported at purchase cost as fair value wa not clear) Mar 31, 20X6 15000000 (As per IAS 40, investment property reported in fair value, will not be depreciated.

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