LagendaBhd has a building in Arang Batuwhich it rents out. It accounts for investment property using the cost model. The building was bought 15years ago at a cost of RM20 million and the estimated useful life was determined on purchase to be 50 years. Due to ecological changes, the area is prone to floods. The fair value of the building at the end of the current year was RM7million. The present value of the flow of rental is RM5.6mil, taking a market interest rate of 12%.
(i) Review whether or not the asset needed to be impaired.
(ii) In year 2020, the market interest rate dropped to 5%. Evaluate the effect of the change in interest rate on the carrying amount of the asset.
(iii) The interest rate remained at 12% but in year 2020 the government enlarged the area enclosed by the river and built embankments to stop flooding. How this action affects the value of the building.
Click on Buy Solution and make payment. All prices shown above are in USD. Payment supported in all currencies. Price shown above includes the solution of all questions mentioned on this page. Please note that our prices are fixed (do not bargain).
After making payment, solution is available instantly.Solution is available either in Word or Excel format unless otherwise specified.
If your question is slightly different from the above question, please contact us at firstname.lastname@example.org with your version of question.