FAC2601
ASSIGNMENT 3 SEMESTER 1 2026
UNIQUE NO.
DUE DATE: 20256
, Financial Accounting for Companies - FAC2601
QUESTION 1
a) Memorandum to the Financial Director
TO: Financial Director, Bunny Ltd
FROM: Financial Accountant
DATE: 31 October 2025
SUBJECT: Classification and Measurement of Vacant Land
Introduction
The purpose of this memorandum is to explain the correct classification and accounting
treatment of the vacant land acquired by Bunny Ltd on 1 July 2025 in accordance with
IAS 40 – Investment Property and IAS 16 – Property, Plant and Equipment.
Classification of the Vacant Land
According to IAS 40, investment property is property held to earn rentals, for capital
appreciation, or both.
The vacant land acquired by Bunny Ltd is currently held for an undetermined future use.
IAS 40 specifically states that land held for an undetermined future use is classified as
investment property because the entity has not yet determined whether the land will be
used as owner-occupied property or held for sale in the ordinary course of business.
Although management is considering constructing another manufacturing facility on the
land in the future, no construction has commenced and no final decision has been
ASSIGNMENT 3 SEMESTER 1 2026
UNIQUE NO.
DUE DATE: 20256
, Financial Accounting for Companies - FAC2601
QUESTION 1
a) Memorandum to the Financial Director
TO: Financial Director, Bunny Ltd
FROM: Financial Accountant
DATE: 31 October 2025
SUBJECT: Classification and Measurement of Vacant Land
Introduction
The purpose of this memorandum is to explain the correct classification and accounting
treatment of the vacant land acquired by Bunny Ltd on 1 July 2025 in accordance with
IAS 40 – Investment Property and IAS 16 – Property, Plant and Equipment.
Classification of the Vacant Land
According to IAS 40, investment property is property held to earn rentals, for capital
appreciation, or both.
The vacant land acquired by Bunny Ltd is currently held for an undetermined future use.
IAS 40 specifically states that land held for an undetermined future use is classified as
investment property because the entity has not yet determined whether the land will be
used as owner-occupied property or held for sale in the ordinary course of business.
Although management is considering constructing another manufacturing facility on the
land in the future, no construction has commenced and no final decision has been
