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Accounting Standards and Theory

   

Added on  2021-06-16

7 Pages1834 Words36 Views
Finance
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Vicinity Centre VCXExecutive summaryThe administrative and financial affairs of Vicinity Centre VCX have been discussed with thehelp of this report. The company is a real-estate investment trust that is listed on the Australian Stock Exchange. Further, the company is primarily involved in property rentals in the form of building and land that is offered to the tenants. Moreover, the impact of variationsin retail market have also been highlighted through this report.2
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Vicinity Centre VCXAnswer to aIn relation to investment property, accounting treatment for the same is covered under AASB 140 that primarily deals with measurement, recognition, and disclosure of the same. Moreover, investment property generally signifies a property that includes land and building held for earning rental profits or for appreciation of capital or both. However, such property is not meant for sale purposes. The prime specifications of such standard comprise of investment property measurement based on cost or fair value model whichever can be suitable based on the scenario for allowing the interest of property to form part of such investment property (Vicinity, 2017). However, it is needed that such property interest must adhere to the requirements laid down under AASB 140, thereby facilitating in thorough disclosure processes wherever needed.In addition, based on such standard, investment property is identified as an asset in a company’s financials on the fulfilment of two prime conditions:a.It must be ensured that such property will assist in attainment of future financial benefits and these must be attained by the company in the upcoming tenure.b.The cost of such property must be computed appropriately so that parties can rely upon the same.Vicinity Centre VCX investment properties comprise of leasehold and freehold properties in the form of buildings and land that are held for earning rental income. Moreover, such property has been recorded at their original purchase expense and any other associated costs incurred to procure the same. Therefore, the policy to record such property of the company is to record the same at cost plus incurred incidental charges. Nonetheless, the company also ascertains present value of its properties by the values disclosed by the valuation experts so that these are carried or recorded at their respective fair values. Besides, any material work in the progress is also summed up to the properties’ overall cost.In relation to valuation, the same is regulated by the Board and the company’s Investment Committee. Furthermore, the company’s major executives are also engaged in the same process (Vicinity, 2017). Thereafter, this process is reviewed periodically after accounting forstatutory changes or variations in market scenarios, etc. The following treatment must be accounted in the following scenarios:3
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