Terachi Bhd is a multinational company, venturing into many types of business and investment activities. On 1 January 20

[answerhappygod]

Terachi Bhd is a multinational company, venturing into manytypes of business and investment activities. On 1 January 2013,Terachi Bhd acquired a new 10-storey building in Kajang, Selangor.The cost of the building was RM24,000,000, excluding legal andother incidental costs of RM2,000,000. The company also incurredpromotional and advertising expenses, looking for the tenants ofRM300,000. The estimated useful life of the building is 31years.
On 10 January 2013, the Terachi Bhd managed to secured a tenancycontract and since then the building has been rented out tonon-related organizations, earning total rental income of RM500,000per month. Terachi Bhd also required to provide ancillary servicesof RM100,000 per annum and charge to the tenants of the premises asa fee. However, these services were considered not significant ascompared to the whole arrangement. At the end of year 2013 and2014, the market value of the building was RM26,700,000 andRM26,200,000 respectively.
Due to the remarkable demand of its products line, Terachi Bhddecided to occupy the entire building as its sales and managerialoffices effectively from 1 January 2016. On that date, the marketvalue of building was RM28,000,000.
On 31 December 2017, the building was revalued by an independentchartered valuer to RM30,000,000.
The company adopts the fair value model and revaluation model tomeasure its investment property and property plant and equipment,respectively.
Required:
State the criteria for an item of investment property to berecognized as an asset according to MFRS 140 InvestmentProperties.
(2 marks)
Discuss the appropriate accounting treatment for the buildingfor years ended 31 December 2013 and 2014. Prepare the relevantjournal entries.
(5 marks)
Prepare the Statement of Profit or Loss (extract) of Terachi Bhdyears ended 31 December 2013 and 2014.
(5 marks)
Advise Terachi Bhd on the accounting treatment of the transferof investment property to owner occupied property on 1 January2016. Prepare the relevant journal entries.
e. Prepare journal entries for the year ended 31 December2017.
(5 marks)
(3 marks) (Total: 20 marks)