a tax return preparer can seek the help of an enrolled agent who is under suspension 613547

Retrospective application of an accounting policy

On Jan 01, 03, entity E acquired a building for CU 40 that was available for use on the same date. The building meets the criteria for classification as investment property (IAS 40). The building was measured according to the cost model, i.e. taking into account depreciation (IAS 40.56). The useful life of the building is 40 years. At the end of 05, E decides to account for its investment properties according to the fair value model. In applying the fair value model, no depreciation is recognized. Instead, all changes in fair value are recognized in profit or loss (IAS 40.33–40.55). Fair value of the building developed as follows:

Posting status:

Moreover, depreciation expense has been recognized as follows, in each of the years of 03–05:

Required

(a) Prepare any necessary entries in E”s financial statements as at Dec 31, 05.

(b) Illustrate the effects of the entries (including the effects of the posting status) on E”s statement of financial position, separate income statement, and statement of changes in equity in simplified presentations of these statements.

E has to present only one comparative period (i.e. the year 04) in its financial statements.