Business, 29.07.2021 14:00 kendratorres200

Eka Bhd. (Eka) owns two properties and is applying the cost model of IAS 16 / MFRS 116 Property, Plant and Equipment for its owner-occupied property and the fair value model of IAS
40 / MFRS 140 Investment Property for its investment property.
The details of Eka’s properties are as follows:
Property A
Property A was acquired on 1 February 2010 at the cost of RM1,000,000 (RM600,000 for the
land and RM400,000 for the building). The building has an estimated useful life of 50 years.
Eka uses it for its head office.
Property B
Property B was acquired on 1 March 2020 at the cost of RM3,000,000 and held for its
investment potential. However, due to the specialised nature of this property, the fair value of
the property cannot be obtained. The property has an estimated useful life of 60 years.
Eka uses the straight-line depreciation method on a time-apportionment basis.
Required:
In accordance with the relevant accounting standards, briefly explain how each of the above
properties should be accounted for in the financial statements of Eka Bhd. for the year ended
31 January 2021.

Answers: 3

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Eka Bhd. (Eka) owns two properties and is applying the cost model of IAS 16 / MFRS 116 Property, Pl...

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