What impact will the use of the straight line method

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Problem - A non-current asset (building) has been acquired by a company which wishes to account for this as an investment property. The building cost £6,300,000 on 1 January 2020 and its market value on 31 December 2020 is £8,100,000. The company's depreciation policy for similar non-current assets is the reducing balance method using a rate of 10%.

Required -

(a) De?ne non-tangible assets and depreciation. What impact will the use of the straight line method as compared to the reducing balance method have on the ?nancial statements of an entity? Your answer to this part of the question should not be more than 150 words.

(b) Discuss the impact of revaluing tangible non-current assets as compared to capitalising and depreciating such assets. Your answer to this part of the question should not be more than 120 words.

(c) Discuss the advantages and disadvantages of revaluing tangible non-current assets. Your answer to this part of the question should not be more than 180 words.

(d) Show how the non-current asset would be accounted for in the income statement for the year ended 31 December 2020 and in the statement of ?nancial position as at 31 December 2020 if it could be classed as an investment property using both the fair value model and the cost model.

Reference no: EM132992158

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