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What should be the amount of derecognition gain or loss

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PROBLEM - On January 1, 2021, SCULLY & HITCHCOCK CORP. purchased a building at a cost - of Php 3,000,000. On the same date, the building was leased out under an operating lease. The company's policy regarding the depreciable asset is to depreciate using straight line method over an estimated useful life of 20 years.

The fair value of the building at the end of 2021 and 2022 is Php 3,100,000 and Php 2,450,000 respectively. On January 1, 2023, the company terminated all lease and sold the building for Php 2,990,000 incurring disposal cost of Php 120,000.

Required - Answer the following:

A. If the investment property is accounted using the cost model, what should be the amount of derecognition gain or loss to be reported on its profit or loss in 2023?

B. If the investment property is accounted using the fair value model, what should be the amount of derecognition gain or loss to be reported on its profit or loss in 2023?

C. Prepare the journal entries from 2021 up to disposal of investment property under cost model and fair value model.

Reference no: EM132934935

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