ABC Inc. purchased a shopping complex and with it, a large condominium complex attached to it in the amount of $20,000,000 on January 1, 2013 Both complexes are designated investment property. Both facilities are estimated to have a useful life of eighteen years and a salvage value of $2 million dollars. On December 31^st, 2013, the fair value of both complexes was $25 million. ABC Inc. prepares its financial statements under IFRS. Assuming that ABC uses the Cost Model to account for the complex, the carrying value of both complexes on December 31^st, 2013 would be:

Question

Quizplus · Accepted Answer

Under the Cost Model, the carrying value is calculated by subtracting accumulated depreciation from the purchase cost. The depreciation for one year is ($20,000,000 - $2,000,000) / 18 = $1,000,000. Therefore, the carrying value is $20,000,000 - $1,000,000 = $19,000,000.

ABC Inc Purchased a Shopping Complex and with It, a Large