Determine the recoverable amount of the land

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Reference no: EM13492252

Question 

On 1 July 2009 Club Dean Ltd purchased land at a cost of $4,750,000. Club Dean Ltd has made the following estimates of the value of the land:

Value of land at

30 June 2010

30 June 2011

30 June 2012

Net Selling Price

4,275,000

4,275,000

4,370,000

Market Value

4,512,500

4,512,500

4,607,500

Value in Use

4,987,000

4,560,000

4,275,000

 

Required

1.      Determine the recoverable amount of the land for each reporting date and identify the relevant AASB (Australian Accounting Standards) that applies.

2.      If Club Dean Ltd uses the cost model, calculate the carrying amount of the land. Prepare the journal entries necessary to effect any adjustments required by the accounting standards for each year.

3.      If Club Dean Ltd revalues its land at the end of each year, calculate the carrying amount of the land. Prepare the journal entries necessary to effect any adjustments required by accounting standards for each year.

 

Reference no: EM13492252

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