Question
On 1 July 2009 Club Dean Ltd purchased land at a cost of $4,750,000. Club Dean Ltd has made the following estimates of the value of the land:
|
Value of land at
|
30 June 2010
|
30 June 2011
|
30 June 2012
|
|
Net Selling Price
|
4,275,000
|
4,275,000
|
4,370,000
|
|
Market Value
|
4,512,500
|
4,512,500
|
4,607,500
|
|
Value in Use
|
4,987,000
|
4,560,000
|
4,275,000
|
Required
1. Determine the recoverable amount of the land for each reporting date and identify the relevant AASB (Australian Accounting Standards) that applies.
2. If Club Dean Ltd uses the cost model, calculate the carrying amount of the land. Prepare the journal entries necessary to effect any adjustments required by the accounting standards for each year.
3. If Club Dean Ltd revalues its land at the end of each year, calculate the carrying amount of the land. Prepare the journal entries necessary to effect any adjustments required by accounting standards for each year.