Reference no: EM133004206
Question - ABC Co. has the following assets.
Vacant building to be leased out under operating lease 4,000,000
Building being constructed for TO ADJUST, Inc. 800,000
Building under construction to be used as office 1,600,000
Building under construction to be rented out under operating lease 400,000
Building rented out to MODULATE's employees who pay rent at market rates 3,200,000
Office building awaiting disposal 200,000
1. How much is the total investment property?
a. 4,200,000
b. 4,400,000
c. 4,600,000
d. 7,600,000
HIJ Co. acquired a building on January 1, 2021 for a total cost of 24,000,000 and classified it as investment property. HIJ Co. uses the fair value model for its investment property. On January 1, 2025, when the carrying amount of the building is 16,000,000, the elevator in the building was replaced for a total cost of 3,200,000. It is impracticable to determine the fair value of the replaced part. The fair value of the building on December 31, 2025 is 17,200,000.
2. How much is the loss recognized during the year?
a. 3,200,000
b. 2,000,000
c. 0
d. not determinable from the given information. HIJ should resort to cost model.
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