- 10 Marks
FR – L2 – Q22 – Property, Plant and Equipment
Explain accounting treatment for revaluation and depreciation of Tema Limited's head office property under IAS 16.
Question
The following information relates to the financial statements of Accra Enterprises Limited for the year to 31 March 20X4.
The head office of Accra Enterprises Limited was acquired on 1 April 20X1 for GH¢1million. Accra Enterprises Limited intend to occupy the building for 25 years. On 31 March 20X3 it was revalued to GH¢1.15 million. On 31 March 20X4, a surplus of vacant commercial property in the area had led to a fall in property prices and the fair value was now only GH¢0.8 million.
Required
Explain the correct accounting treatment for the above (with calculations if appropriate).
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