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

question 22

Multiple Choice

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 Fair Value Model to account for the complex, the amount of amortization expense to be recorded on ABC's 2013 financial statements would be:

• A) $2 million.
• B) $1 million.
• C) $1.8 million.
• D) Nil.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the owners' equity.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuing company.

Net Income

The amount of profit left after all operating expenses, interest, taxes, and dividends have been deducted from total revenue.

Dividend Payout Ratio

The dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividends, expressed as a percentage, showing the percentage of earnings distributed as dividends.