LagendaBhd has a building in Arang Batuwhich it rents out
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%. Required: (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…
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