ABC Ltd is in the business of providing management consultation services in Parnell area. ABC bought a property on 1 July 2012 for a cost of
$1500000. The property consists of land and building. The value of the land is $800000 at time of purchase. The property is used as offices and seminar
rooms. ABC renovates the property in order to make it suitable for its operation. The cost of renovation is $80000. The renovation is completed in 2 months
after the purchase. ABC has a balance date of 30 June.
Determine the cost of the property to be recorded in the accounts. (Explain your answer with reference to NZ IAS 16).
Assume ABC depreciates the building part of the property on a straight-line basis. Depreciation is $40000 each year for the building.
The company depreciates its PPE to the nearest month. On 1 July 2013 the property is revalued to $1700000 of which the land portion appreciated by
$100000. Prepare journal entries to reflect the revaluation for both land and building of the property.