How much should be recognized as gain

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Problem - Marigold Company completed the construction of a building at the end of 2019 for a total cost of P40,000,000. The building is estimated to be economically useful for 25 years. The building was constructed for the purpose of earning rentals under operating leases. The tenants began occupying the building after its completion.

The company opted to use the fair value model to measure the building. An independent valuation expert was used by the company to estimate the fair value of the building on an annual basis. According to the expert the fair values of the building are:

Year

Fair Value

2019

42,000,000

2020

47,200,000

2021

46,400,000

In 2020 income statement, how much should be recognized as gain / (loss) regarding change in the fair value?

Reference no: EM132728296

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