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Comment on the accounting treatment of office property

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Reference no: EM132796854

Question - Marconi and Son Ltd are auditors of Skyworld Property Ltd. A journal article in Property Survey journal indicates a 25% fall in value of properties in Ho due to the relocation of office to Accra. The company's office blocks were valued at GH?5 million, up from GH? 4.5 million by a valuer but the property was valued in the name of the Managing Director, Mr Skyworld. The Managing Director refused a suggestion of second valuation on the ground that such cost was unnecessary. Treating the office blocks as an investment property raised profit by GH?1,490,000.

Required -  

a. Explain the circumstances that could justify a change in the accounting policies of a company.

b. Comment on the accounting treatment of office property either as an investment or lease.

Reference no: EM132796854

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