Quizes Test

Sydney Construction Co owns a number of properties throughout the world. Where these are classified as investment properties it measures them using the fair value model. Where they are classified as property, plant and equipment it measures them using the cost model and depreciates them over 30 years. On 1 January 20X9 Sydney Co acquired an apartment block at a cost of $ 4.2 million; it rents individual apartments in this building to its construction employees on a short-term basis. The employees are required to pay subsidised rent to Sydney Co. The fair value of the property on 31 December 20X9 is $ 4.6 million.

What amounts are recognised in the financial statements in the year ended 31 December 20X9 in respect of the property?

A.$4.6 million carrying amount and $140,000 gain in profit or loss

B.$4.6 million carrying amount and $140,000 gain in OCI

C.$4.06 million carrying amount and $140,000 expense in OCI

D.$4.06 million carrying amount and $140,000 expense in P/L

Question 1 of 2

Zone Co, a company specialising in the provision of sports equipment, purchased a property, which the management decided to rent out for two years to Partition Co by way of an operating lease for $5,000 per calendar month.

Which of the following is true?

A.The property should be capitalised as property, plant and equipment and depreciated over an appropriate useful life

B.A lease receivable should be recognised in accordance with IFRS 16

C.The property should be classified as an investment property and measured using either the cost or the fair value model

D.Zone Co should not record the purchase of the property as the company will not occupy or use it.

Question 2 of 2

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