4/29/23, 10:12 PM SOL. MAN. Chapter 21 Investment Property IA PART 1B 4/29/23, 10:12 PM SOL. MAN.

4/29/23, 10:12 PM SOL. MAN. Chapter 21 Investment Property IA PART 1B

8. A
Chapter 21
9. Solution:
Investment Property Acquisition cost 1,200,000
Professional fees and taxes 50,000
Repairs and renovations 200,000
Total cost 1,450,000
PROBLEM 1: TRUE OR FALSE
1. FALSE 10. Solutions:
2. TRUE Requirement (a): Statement of profit or loss
3. TRUE (20M + 8M) – (15M – 10M) = 3,000,000 unrealized gain
4. TRUE
5. FALSE – initially measured at cost Requirement (b): Statement of financial position
(20M + 8M) = 28,000,000
6. TRUE
7. TRUE Requirement (c): Adjusting entry
8. TRUE Investment property 3,000,000
9. TRUE Unrealized gain 3,000,000
10. FALSE ₱200K loss – carrying amount of replaced escalator

11. Solutions:
PROBLEM 2: FOR CLASSROOM DISCUSSION Requirement (a): Statement of profit or loss
1. D (9M + 9M) ÷ 10 = 1,800,000 depreciation expense
2. B
3. B Requirement (b): Statement of financial position
(9M + 9M) x 7/10 = 12,600,000
4. Solution:
• Farming land purchased for its investment potential. Requirement (c): Adjusting entry
Planning permission has not been obtained for Depreciation expense 1,800,000
building constructions of any kind. 700,000 Accumulated depreciation - Investment property 1,800,000

12. D
APPLICABLE
OTHER ITEMS STANDARD 13. C
• Factory which, due to a decline in activity, is no
PFRS 5 14. Solution:
longer required and is now being held for sale.
• Factory in the process of being constructed on Requirement (a):
PFRS 15 Investment property (at fair value) 800,000
behalf of the government.
• New office building used as head office which Accumulated depreciation 4,000,000
was purchased specifically in the center of a Impairment loss (squeeze) 200,000
PAS 16 Building 5,000,000
major city in order to exploit its capital gains
potential.
Requirement (b):
5. C Investment property (at fair value) 1,400,000
Accumulated depreciation 4,000,000
6. B Building 5,000,000
Revaluation surplus (squeeze) 400,000
7. B

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4/29/23, 10:12 PM SOL. MAN. Chapter 21 Investment Property IA PART 1B 4/29/23, 10:12 PM SOL. MAN. Chapter 21 Investment Property IA PART 1B

Requirement (c): PROBLEM 3: EXERCISES

Investment property (at carrying amount) 1,000,000
Accumulated depreciation 4,000,000 1. Solutions:
Building 5,000,000 Requirement (a):
Land held for long-term capital appreciation 200,000
Land held for a currently undetermined future use 700,000
Building rented out under operating lease 800,000

Total investment property 1,700,000

Requirement (b):
Other items Classification
Land held for future plant site PPE
Land held for sale in the ordinary course of business INVENTORY
Building rented out under finance lease NOT AN ASSET
Equipment leased out under an operating lease PPE

2. Solutions:
Case 1
(1,200,000 + 50,000 + 200,000) = 1,450,000 x 9.5/10 = 1,377,500

Case 2
Unrealized loss – P/L (1.4M – 1.450M) 50,000
Investment property 50,000

3. Answer: None, the property is classified as investment property.

4. Answer: None, the property is classified as owner-occupied property.

5. Solutions:

Case 1:
Investment property (1M x 7/10) 700,000
Accumulated depreciation (1M x 3/10) 300,000
Building 1,000,000

Case 2:
Investment property (fair value) 900,000
Accumulated depreciation (1M x 3/10) 300,000
Building – PPE 1,000,000
Revaluation surplus 200,000

Case 3:
Investment property (recoverable amt.) 600,000
Accumulated depreciation (1M x 3/10) 300,000
Impairment loss (squeeze) 100,000
Building 1,000,000

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4/29/23, 10:12 PM SOL. MAN. Chapter 21 Investment Property IA PART 1B 4/29/23, 10:12 PM SOL. MAN. Chapter 21 Investment Property IA PART 1B

6. Solution: PROBLEM 4: CLASSROOM ACTIVITY

Investment property 930,000 Solution:
Loss on transfer 70,000 Please refer to the accompanying power point presentation. The “pointers” in
Inventory 1,000,000 the activity are actually the “Learning Objectives” in the lecture aid.

7. None. The event is not a change in use.

8. None. The event is not a change in use. Dear Fellow Teacher,

9. Solution: Please elaborate to the learners that in real life settings,
Building (6M x 6/10) 3,600,000
Accumulated depreciation (6M x 4/10) 2,400,000 how we deal with other people (e.g., clients, colleagues, family,
Investment property 6,000,000 friends, strangers, etc.) is, more often than not, more important
than the level of education that we have attained. That is why I
10. Solution: assigned a rating of 70% for “audience impact” and 30% only to
Investment property (1.5M + 1.2M + 1M) 3,700,000
Cash 3,700,000
the other criteria.
to record the construction costs
If the learner understands this now, he/she will surely
Investment property (4M – 3.7M) 300,000 go a long way after graduation.
Unrealized gain 300,000
to record the year-end adjustment

11. Solution: (4,000,000 x 2/5) = 1,600,000 Best wishes,

12. Answer: 1,200,000 Zeus
13. Answer:
Accum. depreciation (4.2M x 2/6) 1,400,000
Loss from fire (squeeze) 2,800,000 PROBLEM 5: MULTIPLE CHOICE - THEORY
Investment property 4,200,000 1. E 6. A
Compensation from third parties for investment property that was impaired,
2. C 7. C
lost or given up (e.g. claims from insurance company for insured property 3. C 8. D
lost) shall be recognized in profit or loss only when the compensation 4. D 9. D
becomes receivable (in the problem, on October 10, 20x3 when the claim 5. D 10. A
was approved).

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4/29/23, 10:12 PM SOL. MAN. Chapter 21 Investment Property IA PART 1B 4/29/23, 10:12 PM SOL. MAN. Chapter 21 Investment Property IA PART 1B

SOL. MAN. Chapter 2 CASH & CASH

6
Equivalents IA PART 1A PROBLEM 6: MULTIPLE CHOICE: COMPUTATIONAL
1. D
Intermediate Accounting 1 100% (5) Solution:
Land held for long-term capital appreciation 3,500,000
Land held for a currently undetermined future use 5,700,000
Land held for long-term speculation 1,400,000
Land owned by the entity and leased out under an operating
SOL. MAN. Chapter 18 GOVT Grants IA PART Lease 7,800,000
6 Building owned by the entity and leased out under an
1B operating lease
Building – currently vacant but is held to be leased out under
11,800,000

various operating leases 7,100,000

Intermediate Accounting 1 100% (3) Warehouse currently being developed – to be used as
investment property 9,700,000
Total investment property 47,000,000

2. B (29,370,874 x 18/20) = 26,433,787

Unit2 Topic 2 Assessment 3. B (6M – 480,000) = 5,520,000 carrying amt. at the beg. of the year –
4 240,000* depreciation for the year = 5,280,000 carrying amt. at the end
Intermediate Accounting 1 100% (3) of the year
*(480,000 ÷ 2) = 240,000

4. D
Sol.Man. Intermediate Accounting Part 1A 5. D
6
2019 6. D

7. B 400,000 – (1M X 6/10) = 200,000 impairment loss

Intermediate Accounting 1
100% (2)
• Choice (a) is incorrect because the existing standard(s), i.e., in this case
PAS 40 and PAS 36, apply until the date of reclassification.
• Choice (c) is incorrect because the investment property is measured
under the cost model.
• Choice (d) is incorrect.

8. C 400,000 – (1M X 6/10) = 200,000 unrealized loss

(See explanations in the preceding problem)

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