Prepare journal entries on disposal of property

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Reference no: EM132732221

Question - HK Holdings, a property development company that engaged in the business of developing and selling properties, purchased property with estimated useful life of 33 years on 1.1.20X2 at cost of $66 million. The company then rented the property to an outside party at market rental. The following revaluations were made in subsequent years:

Valuation at 31.12.20X2 70

Valuation at 31.12.20X3 60

Valuation at 31.12.20X4 90

On 30 June 20X5, the company has redeveloped this property and placed it together with a portfolio of other properties on market for sale. At that time, the market value of the property was $120m.

Required -

a) Prepare journal entries for the depreciation or revaluation of property for the years ended 31 December 20X2 to 20X4 under:

(i) the cost model

(ii) the fair value model

b) Prepare the extracts of financial statements for the years ended 31 December 20X2 to 20X4 in (a) above.

c) Prepare journal entries for the transfer of usage on 30 June 20X5 under:

(i) the cost model

(ii) the fair value model

d) Prepare the extracts of financial statements for 6 months ended 30 June 20X5 in (c) above.

e) Assume that the company sold the property on 1 January 20X5 for $110m, prepare journal entries on disposal of property under:

(i) the cost model

(ii) the fair value model

Reference no: EM132732221

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