View the step-by-step solution to:

Question 2 (a) After initial recognition for an entire class of property, plant and equipment, an entity is required to choose either,(a)the cost

Question 2
(a) After initial recognition for an entire class of property, plant and equipment, an entity is required to choose either,(a)the cost model or (b) the revaluation model as its accounting policies. Write a short explanation about the two models.
(b) On 12 November 20x6,Jeng Ting Ltd acquired land on a remote island at a cost of $300,000.This land was held for development as a resort which would take place when transport to the island was made available. At each reporting date, Jeng Ting ltd made the following assessments of the net selling price of the land and the value of the land to the business if kept for future use:
Date Net selling price value in use
--------------------------------------------------------------------------------------------------------------------------------------
31 December 20x6 $350,000 $400,000
31 December 20x7 $290,000 $330,000
31 December 20x8 $280,000 $250,000
31 December 20x9 $320,000 $310,000
(I) Using the cost model, at what amount should the land be reported in the statement of financial position of Jeng Ting Ltd for each reporting date? Explain your answers.
(ii)Assume that on 12 November 20x9, the government cancelled all plans to provide transport to the island. Jeng Ting Ltd is unable to sell off the land, the cost to Jeng Ting Ltd of developing transport exceeds the present value of expected future benefits of operating the resort. How should Jeng Ting Ltd account for this event?
(c) In preparing its financial statements to comply with the IFRS, an entity can choose to depart from a particular IFRS as long as it has proper disclosure. Evaluate and comment on this statement.

Sign up to view the entire interaction

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question