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How much is the carrying amount of the investment property

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Reference no: EM132757033

Entity acquires an investment property for P1,000,000 cash. Additional costs incurred are as follows,

Repairs and remodeling before occupancy = P50,000

Legal cost of transferring title to the property = P20,000

Repairs after occupancy = P15,000

The investment property is estimated to have a remaining useful life of 10 years, and a residual value equal to 5% of initial cost.

Problem 1: Entity A uses the straight-line method of depreciation. How much is the carrying amount of the investment property under the cost model after one year?

a) P914,850 c) P968,350

b) P923,100 d) P872,100

Problem 2: Entity A uses the straight-line method of depreciation. The investment property has a fair value of P980,000. at the end of year 1. How much is the carrying amount of the investment property under the fair value model after one year?

a) P980,000 c) P986,350

b) P973,200 d) P837,900

 

Reference no: EM132757033

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