How each of the properties should be treated in the accounts

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Reference no: EM132599783

Bacon Tallman Company has 3 properties at 31 December 2013.

Property Ali

This has been an investment property for a number of years. It had a fair value of RM 7.5 million at 31 December 2012 and RM 8.7 million at 31 December 2013. Maintenance of the property cost RM 200,000 during 2013.

Property Baba

This was bought for RM 5.1 million on 1 August 2013. Legal fees and stamp duty amounted to RM 300,000. The property was rented to a third party from 1 August 2013 and had a fair value of RM 5.9 million at 31 December 2013.

Property Cari

This is in the process of being constructed by the company. At 31 December 2013 a total of RM 7.9 million had been spent. The property is expected to be completed in early 2014. A tenant has already been found and the level of rent indicates the property will have a market value of RM 9.0 million. The policy of the company is to value investment properties at fair value and PPE at cost.

Required:

Question1 : Explain how each of the properties (as per MFRS140) should be treated in the accounts of the company for the year to 31 December 2013.

Reference no: EM132599783

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