Determining The Fair Value Of The Property Using The Market Cost And Income Methods 2710687

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Need answer to question 4.(file attached)
DISCUSSION QUESTION FOCUSED ON THE DISCLOSURE OF THE
APARTMENT COMPLEX’S FAIR VALUE
4. Determine the fair value of the property using the market, cost, and income
methods presented in IFRS 13, Appendix B. Prepare a memo to the controller
of KOALA, Inc. documenting your assessment of the fair value of the
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property. Be certain to consider the range of values indicated by the different
measurement techniques and whether the inputs are described within Level 1,
2, or 3 of the fair value hierarchy. Also identify and explain any differencesin the
fair values you determined forthe impairment testing and the fair value disclosure
required by IAS 40. Be sure to attach a copy of your Excel worksheet to your
memo. Document Preview:

CASE STUDY KOALA, Inc.: An Application of Impairment Testing and Fair Value Estimation Using International Financial Reporting Standards INTRODUCTION John Smith is the Director of Accounting at KOALA, Inc., a U.S.-based subsidiary of an Australian holding company. Consistent with its parent company, KOALA, Inc. prepares its financial statements in accordance with International Financial Reporting Standards (IFRS). John and the accounting staff are working on the June 30, 20X2, year-end adjusting entries. Once the entries are complete, they can prepare a draft of the IFRS-based annual financial statements for their external auditors to audit. As part of the year-end process, John faces one of his most challenging assignments to date. He must determine whether the carrying value of the Ithaca, New York student rental property is impaired, and also provide a fair value estimate of that property. Because of the judgment involved in determining the recoverable amount of the asset as defined by International Accounting Standard (IAS) 36 (IASB 2005a), and the determination of the asset’s fair value required by that standard and IAS 40 (IASB 2005b), John is particularly concerned that his estimates are well supported and easy to explain to the company’s independent public accounting firm’s audit staff. John graduated seven years ago with a degree in accounting from a large U.S. university. After graduation, he worked for a U.S.-based commercial real estate company. He’s well versed in U.S. generally accepted accounting principles (GAAP), but finds his recent move to KOALA, Inc. includes the challenges of becoming familiar with the requirements of IFRS. In his prior position, he reviewed each of 1the company’s rental properties for possible impairment, but these reviews never resulted in any impairment losses even during the worst of the real estate crisis. He is sure this is because of the U.S. GAAP provision that…

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