FINANCIAL ACCOUNTING AND REPORTING 4

MELOR BHD. (MFRS140 INVESTMENT

PROPERTY)

Prepared by:Hazwani Izzati Bt Bakhori 62288113016Nur Fatihah Bt Ramli 62288113756Ku Nurul Aliea Bt Ku Mat Zahari 62288113956Nor Aisyah Bt Mohammad Raazali 62288212059Noor Fadzilah Binti Rodi 62288212148

COST OF THE INVESTMENT PROPERTY ON INITIAL RECOGNITION

Investment Property = Initial Cost + Transaction Cost

RM Purchase landed property 1,750,000 Legal and agency fees 52,500 Cost 1,802,500

Due to changes in MV 31/12/2014= Market Value – Carrying Amount= RM2,500,000 – RM1,802,500 = RM697,500

01/01/2014Cost:

RM1,750,000

31/12/2014MV:

RM2,500,000

31/03/2015Disposal:

RM2,750,000

Investment Property RM RM 1/1/14 Bank 1,802,500 31/12/14 Bal c/f 2,500,000 31/12/14 SOCI/PNL 697,500

2,500,000 2,500,000 1/1/15 Bal b/f 2,500,000 31/03/15 Disposal 2,500,000

Disposal RM RM31/03/15 Inv. Property 2,500,000 31/03/15 Bank 2,750,000 SOCI/PNL 250,000

2,750,000 2,750,000

SOME OF THE ITEM ARE NOT CAPITALIZED AND SHOULD BE

RECOGNIZED MFRS140 Investment Property is about buying

property for the sake of investment Some cost are not capitalized because

Investment Property shall be measured initially at cost, including transaction costs

Some cost will be not capitalized such as administrative expenses because it is not following the recognition of MFRS140 Investment Property

The recognition state that an asset shall be recognized when the future economic benefits existed and the cost can be measured reliably

CALCULATION OF GAIN OR LOSS ON DISPOSAL

Gain/Loss Due to Changes of MV = Disposal – Carrying Amount= RM2,750,000 – RM2,500,000= RM250,000

JOURNAL ENTRIES RM RMDr Bank 2,750,000 Cr Disposal 2,750,000

Dr Disposal 250,000 Cr SOCI/P&L 250,000

Dr Bank 2,750,000 Cr SOCI/P&L 250,000 Cr Investment Property 2,500,000