Reference no: EM132700459

Problem 1: The distinguishing characteristic that identifies an investment property from the other assets of an entity is?

a. Changes in fair value of the asset is recognized in surplus or deficit.
b. The property does not derive cash flows separate from the other assets of the entity.
c. Generates separately identifiable cash flows from the other assets of the entity.
d. Earns rental as part of the ordinary operations of the entity.

Problem 2: Which of the following statements is correct regarding investment property?

a. An entity may classify assets other than land and/or building as investment property.
b. During the period, Entity A, a government entity, reclassifies a building that was previously used as office space to investment property. Entity A will recognize a gain if the fair value of the asset exceeds its carrying amount on the date of transfer.
c. When a government entity applies the fair value model to account for its investment properties subsequent to initial recognition, changes in fair values are recognized in surplus or deficit rather than a direct adjustment to equity.
d. Transfers to or from investment property shall be made when, and only when, there is a change in use.