Reference no: EM132799785

Question - INVESTMENT PROPERTY - On 1 January 2013, Laguna Bhd acquired an office building and classified as an investment property as the building renting out to independent third parties. The cost of the building amounted to RM2million. Remaining useful of the building on the acquisition date was 50 years.

On 30 June 2014, the management began evaluating other possible uses for the investment property and considered the analysis of possible uses for the building and decided that it would be redeveloped for use as a research and development centre. At that meeting management decided to give notice to all tenants that they would be required to vacate the building on or before 31 December 2014 and that they would be compensated for vacating the premises early in accordance with the requirements of tenancy agreement. Notices were sent to the tenants on 15 October 2014, after management had consulted the company's lawyers. On 31 December 2014 the tenants vacated the building and redevelopment of the building for use as the entity's research and development centre began. On 31 March 2015 the redevelopment was completed and the company's research and development team occupied the building.

The company can measure the fair value of the investment property reliably without undue cost or effort on an on-going basis. The fair values of the buildings are as follows:

Fair value RM'000

1 January 2013 2,000

31 December 2013 3,500

30 June 2014 3,800

31 December 2014 4,200

31 December 2015 4,300

The company adopts fair value model and cost model to measures its investment property and property plant and equipment respectively.

Required -

a. When did the building cease to be an investment property?

b. Prepare extract statement of profit or loss for the year ended 31 December 2013, 2014 and 2015 and statement financial position on that date.