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Chapter 9 - GOvernment Accounting

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371 views4 pages

Chapter 9 - GOvernment Accounting

Uploaded by

Christian Estroga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 9_Government Accounting

Investment Property- land or building held for rentals or capital appreciation.

Measured @COST, depends on the mode of acquisition.

Modes of acquisition

Cash Purchase (Purchase price + any direct cost)

Direct cost is cost necessary in bringing the asset to its intended condition

Example of direct cost:

 Professional fees
 Property transfer tax

Journal:

Investment Property, Land 1.08 M


Cash-MDS Regular 1.08 M

Installment Purchase (Cash price equivalent, cash price - total payments= Interest expense)

Non-Exchange transaction (Fair Value at acquisition date)

Journal:

Investment Property, Land 1M


Income from Grants and 1M
Donations in Kind
Self-Construction (all cost related in the self-constructed investment, cost incurred in constructing the
property are expense)

Construction costs are initially recorded as CONSTRUCTION IN PROGRESS. Upon COMPLETION, it


is reclassified as INVESTMENT PROPERTY.

INVESTMENT PROPERTY COST DOES NOT include the following

 Start-up cost, unless necessary


 Operating losses incurred
 Abnormal amounts of wasted materials

Subsequent measurement Note: Fair Value model for business entities IS NOT
ALLOWED for government entities
@Cost model

TRANSFER TO OR FROM INVESTMENT PROPERTY

 when there is a change in use


 @ cost
 No gain or loss shall arise unless transferred asset is impaired (damaged)
o impairment loss shall be recognized first before reclassification

Evidence by the FF.

 Commencement of owner-occupation *investment prop. to owner-occupied prop.*


 End of owner-occupation *Owner-occupied prop. to investment property*
 Commencement of operating lease *transfer from inventories to investment property*
 Commencement of development with a view to sale *investment property to inventories*
Transfers TO Investment property

PPE to IP

Journal:

Investment property, Buildings 500K


Acc. Depreciation 400k
Acc. Impairment Loss 100k
Building 1M

Journal:
Investment Property 1M
Merchandise inventory 1M

Transfers FROM investment property

Journal:
Building 500K
Acc. Depreciation 400k
Acc. Impairment Loss 100k
Investment property, Buildings 1M

Case B: Redevelop the building in the previous example (Case A)

Journal:
Merch. Inventory 500K
Acc. Depreciation 400k
Acc. Impairment Loss 100k
Investment property, Buildings 1M
Derecognition
 Investment property is derecognized when disposed or permanently withdrawn from use and
no future economic benefits is expected from its disposal.
o Net disposal proceeds – carrying amount = gain or loss in surplus or deficit
Impairment
 Carrying amount exceeds its recoverable amount
o The excess is impairment loss
o Recoverable amount
 Higher of an assets fair value less cost to sell and value in use
o Value in use
 Present value of the estimated future cash flows to be derived from continuing
use of the asset

Cash generating unit

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