Investment Property

Galore Company ventured into construction of a condominium in Makati.

The BOD decided that instead of selling the condominium, the entity
would hold this property for purposes of earning rentals. The construction
was completed and the property was placed in service on January 1, 2019.

The cost of the construction was P50,000,000. The useful life of the
condominium is 25 years and the residual value is P5,000,000.

An independent valuation expert provided the following fair value at each

subsequent year-end:

December 31, 2019 55,000,000

December 31, 2020 53,000,000
December 31, 2021 60,000,000

1. Under cost model, what amount should be reported as depreciation of

investment property for 2021?
Galore Company ventured into construction of a condominium in Makati.
The BOD decided that instead of selling the condominium, the entity
would hold this property for purposes of earning rentals. The construction
was completed and the property was placed in service on January 1, 2019.

The cost of the construction was P50,000,000. The useful life of the
condominium is 25 years and the residual value is P5,000,000.

An independent valuation expert provided the following fair value at each

subsequent year-end:

December 31, 2019 55,000,000

December 31, 2020 53,000,000
December 31, 2021 60,000,000

2. Under fair value model, what amount should be recognized as gain from
change in fair value for 2020?
Eragon Company and its subsidiaries own the following properties at year-
end:

Land held by Eragon for undetermined use 5,000,000

A vacant building owned by Eragon and to be
leased out under an operating lease 3,000,000
Property held by a subsidiary of Eragon, a
real estate firm, in the ordinary course of
business 2,000,000
Building owned by subsidiary of Eragon and for
which subsidiary provides security and
maintenance services to lessees 1,500,000

3. What is the total investment property that should be reported in the

consolidated statement of financial position of the parent and its
subsidiaries?
Eragon Company and its subsidiaries own the following properties at year-
end:

Land held by Eragon for undetermined use 5,000,000

A vacant building owned by Eragon and to be
leased out under an operating lease 3,000,000
Property held by a subsidiary of Eragon, a
real estate firm, in the ordinary course of
business 2,000,000
Building owned by subsidiary of Eragon and for
which subsidiary provides security and
maintenance services to lessees 1,500,000

4. What is the total amount that should be reported as owner occupied

property and included as PPE in the consolidated statement of financial
position?
Diamond Company own the following properties at year-end:

Land held by Diamond for determined use 5,000,000

A vacant building owned by Diamond and to be
leased out under a finance lease 3,000,000
Property held by Diamond, a real estate firm,
in the ordinary course of business 2,000,000
Land held for future factory site 3,5000,000
Machinery leased out to an unrelated party
under an operating lease 1,000,000

5. What is the total investment property that should

be reported ?