Compose an email response to inquiry by financial director

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Reference no: EM132543288

Point 1: Seringa limited acquired a property in Rundu (which was leased to tenants) for which the fair value has never been determinable.

Point 2: Construction of the building commenced in June 2014 and was completed and available for use on 1 January 2016 at a cost of N$3000000. its total estimated useful life is 20 years. Fair values are now considered reliably measurable and the accountant is adamant that the asset should either be measured under the fair value model forthwith or that the depreciation on the building should be measured using an estimated residual value of N$500000(previously the residual value was nil). The estimated useful life has remain unchanged. the fair value on the 31 December 2019 was N$6000000.

Point 3: Investment properties are accounted for in accordance with the fair value model whilst owner occupied property is accounted for in accordance with the cost model.

Point 4: The property has not been disposed of during the current year. The financial director is unsure of how this property should be classified and measured and he asked for help from you, the financial accountant, to investigate this and report back to him.

Required:

Question 1: Compose an email response to this inquiry by the financial director of Seringa ltd about the classification and measurement of property with reference to IAS 16: property plant and equipment where appropriate. The reporting date is 31 December 2019. In dealing with the measurement of the property, you need to provide relevant calculations. show your workings

Question 2: provide journal entries for all the above transactions for the year ended 28 feb 2020. ignore narations.

Reference no: EM132543288

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