Blossom Corporation owns and manages a small 10-store shopping centre and classi

Question

Blossom Corporation owns and manages a small 10-store shopping centre and classifies the shopping centre as an investment property. Blossom has a May 31 year end and initially recognized the property at its acquisition cost of $10.7 million on June 2, 2016. The acquisition cost consisted of the purchase price of $10 million, costs to survey and transfer the property of $475,000, and legal fees for the acquisition of the property of $225,000. Blossom determines that approximately 28% of the shopping centre's value is attributable to the land, with the remainder attributable to the building. The following fair values are determined Date Fair Value May 31, 2017 03 $10,650,000 May 31, 2018 $10,547,000 May 31, 2019 $11,159,000 Blossom expects the shopping centre building to have a 35-year useful life and a residual value of $1.4 million. Blossom uses the straiqht-line method for depreciation

Explanation / Answer

Date Account Debit credit 31 may 2017 Unrealized holding loss on investment 50000 Investment fair value adjustment [10,650,000-10,700,000] 50000 31 may 2018 Unrealized holding loss on investment 103000 Investment fair value adjustment [10547000-10650000] 103000 31 may 2019 Investment fair value adjustment 612000 Unrealized gain on holding investment [11159000-10547000] 612000

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