Emmanuel L.

asked • 10d

Property plants and equipment

2. MTN Ghana Ltd. acquired a brand new property (land and buildings) on 1st January, 2016

for GH¢40 million (including GH¢15 million in respect of the land). The asset was

revalued on the 31st of December, 2017 to GH¢43 million (including GH¢16.6 million in

respect of the land). The buildings element was depreciated over a 50-year useful life to a

zero residual value. The useful life and residual value did not subsequently need revision.

On the 31st of December, 2018 the property was revalued downwards to GH¢35 million as

a result of the recession (including GH¢14 million in respect of the land). The company

makes a transfer from revaluation surplus to retained earnings in respect of realised profit.

Required:

i.

Determine the amounts that should be recognised in profit or loss and other

comprehensive income for the years ended 31 December 2017 and 31 December

2018.

ii.

Explain the reasons for your treatment of the two revaluations that occurred in

2017 and 2018 in the financial statements.

2 marks

3. Assuming IASB board is considering amendment to the IAS 16: Property, Plant and

Equipment, what changes will you suggest to IASB board based on what you have learnt

so far about the standard?


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