Valix Finacc vol 1 Problem 13-14

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 13-14

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

     Vacant building                                                                                                   3,000,000

     Building owned by a subsidiary Eragon occupied by lessees                               1,500,000

     Total investment property                                                                                    9,500,000

2.  a.  The property held by a subsidiary Eragon in the ordinary course of business in included

           in inventory.

 

     b.  The property held by Eragon for use in production is owner-occupied property and

          therefore part of property, plant and equipment.

c.  The land leased by Eragon to a subsidiary under an operating lease is owner-  

occupied property for purposes of consolidated financial statements. However, from the perspective of separate financial statements of Eragon, the land is an investment

          property.

     d. The property under construction for use as investment property is owner-occupied

          property until the land is completed. Upon completion, the building becomes

          investment property.

     e.  The land held for future factory site is owner-occupied property and therefore part of

           property, plant and equipment.

      f.  The machinery leased out to an unrelated party is part of property, plant and

          equipment because investment property includes only land and building, and not

          movable property like machinery.