FAC3702 ASSESSMENT 2 SEM 1 OF 2026 EXPECTED SOLUTIONS

(a) Journal Entries for the Soshanguve Property (1 May 2018 to 1 July 2025)



The Soshanguve property was initially held for capital appreciation and accounted for as an
Investment Property under the fair value model. Upon change in use to owner-occupied on 1 July
2025, it is transferred to Property, Plant and Equipment (PPE) at its fair value on that date, which
becomes its deemed cost.


Date Description Debit (R) Credit (R)

, Investment Property – Land
1-May-18 4 200 000
(SFP)
Investment Property – Buildings
7 000 000
(SFP)
Bank (SFP) 11 200 000
Investment Property – Land
30-Jun-25 650 000
(SFP)
Investment Property – Buildings
600 000
(SFP)
Fair value adjustment (P/L) 1 250 000
(Fair value adjustment to R4 850
000 and R7 600 000 prior to
transfer )
1-Jul-25 Land (PPE) (SFP) 4 850 000
Buildings (PPE) (SFP) 7 600 000
Investment Property – Land
4 850 000
(SFP)
Investment Property – Buildings
7 600 000
(SFP)
(Transfer of investment property
to PPE at fair value )

Workings: Fair value adjustment
on 30 June 2025 = (R4 850 000 -
R4 200 000) + (R7 600 000 - R7
000 000) = R650 000 + R600
000.