Initial cost and capitalisation of an investment property

Context

Groupe Valmont (fictitious entities) comprises two companies that each publish IFRS financial statements: Valmont Investissement SA, which applies the fair value model to its investment property, and Valmont Résidences SA, which applies the cost model. For the 31 December 20X5 year-end, you prepare the portfolio file: classification of two properties, acquisition with deferred payment, fair value changes, two situations of change in use, a disposal, the depreciation of a property at cost and the disclosures. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Initial cost file

Purpose of the workpaper

For each acquisition (one instance per property), describe the transaction, enter the deferred price, the rate and period of the credit, the costs incurred and the excluded costs, compute the cash price equivalent, the capitalisable costs and the initial cost, then prepare the entries (capitalised costs, cash price, excluded costs expensed, interest for the period) and their effect on the financial statements.

Questions of the file covered by this workpaper

• Compute the cash price equivalent of the price of N.
• Compute the capitalisable costs of N.
• Compute the initial cost of N.
• Record the acquisition of N and its 20X5 interest, the changes of P and Q, the transfer of T, the disposal of S and the depreciation of V.

• MemoEngagement letterOpen
• ScheduleProperty M1Open
• ContractProperty M2Open
• ContractProperty N acquired with deferred paymentOpen
• ScheduleAppraisals of properties P and QOpen
• ExtractPortfolio registerOpen
• MinutesProperty TOpen
• MinutesProperty UOpen
• ContractDisposal of property SOpen
• ScheduleProperty V under the cost modelOpen
• ExtractReply from the legal departmentOpen
• MemoTraining budgetOpen