Classic Company

Required1

Land held by parent for undetermined use 5,000,000

Vacant building 3,000,000
Building owned by a subsidiary occupied by lessees 1,500,000
Property under construction for use as investment property 6,000,000
Total investment property 15,500,000

Required2
a The property held by a subsidiary in the ordinary course of business is included in inventory

b The property held by parent for use in production is owner-occupied property and therefore part of property, plant and

c The land leased by parent to a subsidiary under an operating lease is owner-occupied property for purposes perspective
of consolidated financial statements. However, from the financial statements of the parent, the land is an investment pr

d The land held for future factory site is owner-occupied property and therefore part of property, plant and equipment.

e The machinery leased out to an unrelated party is part of property, plant and equipment because
investment property includes only land and building, and not movable property like machinery.
e part of property, plant and equipment.

erty for purposes perspective of separate

, the land is an investment property

erty, plant and equipment.

Glamore Company

Cost model Debit Credit

2020 Investment property 50,000,000

Cash 50,000,000

Depreciation 1,800,000
Accumulated depreciation 1,800,000
(50,000,000 5,000,000 / 25)

2021 Depreciation 1,800,000

Accumulated depreciation 1,800,000

2022 Depreciation 1,800,000

Accumulated depreciation 1,800,000

Fair value model

2020 Investment property 50,000,000

Cash 50,000,000

Investment property 5,000,000

Gain from change in fair value (55- 50) 5,000,000

2021 Loss from change in fair value 2,000,000

Investment property (55-53) 2,000,000

2022 Investment property 7,000,000

Gain from change in fair value (60-53) 7,000,000
 Debit Credit

a. Life insurance (10,000 x1/2) Cash surrender value 5,000

Cash surrender value 5,000

b. Prepaid life insurance (28,000 x 1/2) 14,000

Life insurance 14,000

c. Interest expense 4,500

Accrued interest payable (50,000 x 12% x 9/12) 4,500

d. Dividend income 2,000

Dividend receivable 2,000

Current assets:
Prepaid life insurance 14,000
Investment:
Cash surrender value 85,000

Current liabilities:
Loan payable 50,000
Accrued interest payable 4,500