Application of the Fair Value Model
on January 20, 2021

question 66

Essay

Application of the fair value model
On January 20, 2021, Trail Corp. purchased a luxury apartment complex in British Columbia for $ 10 million cash. In addition to the purchase price, Trail paid transfer fees of $ 150,000 and legal fees of $ 20,000.
Wages were paid to maintenance staff during each of the following three years:
$$\begin{array} { l l } \mathbf { 2 0 2 1 } : & \mathbf { 5 1 0 3 , 0 0 0 } \\\mathbf { 2 0 2 2 } : & \mathbf { \$ 1 0 7 , 0 0 0 } \\\mathbf { 2 0 2 3 } : & \mathbf { 5 1 1 0 , 0 0 0 }\end{array}$$ Fair value information:
Dec 31, 2021: $\quad 59.1$ million
Dec 31, 2022: $\quad \$ 10.9$ million
Dex 31, 2023: $\quad \$ 11.7$ million Other information:
The complex qualifies as investment property.
Trail applies the fair value model to all its investment property.
Instructions
Prepare all required journal entries for 2021, 2022, and 2023.