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Part b DEF Property Ltd possessed the following three properties in Hong Kong Property D It was acquired on 1 January 2012 with cost of $40 million which was used for warehouse purpose; the fair value on 31 December 2019 was $56 million. Property E It was bought on 1 January 2017 with cost of $36 million which was used for earning the rental income, the fair value on 31 December 2019 was $46 million. Question 1 (continued) Property F The company was to promote a residential development during 2019, the construction activities had significantly finished and the balance of costs carried in books is $380 million. In the board meeting held on 31 January 2020, DEF moved the storage of its inventories in Property D to a new production plant in Foshan. At 31 December 2019, all D, E properties were vacant. In view of economic downturn due to the outbreak of corona-virus disease, and slump in property market, it is forecasted that the whole project on properties F will realize a loss of $80 million. DEF Ltd has adopted following accounting policies on properties it possess: i. the building under property, plant and equipment at cost model under HKAS 16 and depreciated with the estimated useful life of 30 years, ii. the investment property at fair value model under HKAS 40, and iii. properties for sale as inventories under HKAS 2. Required: Determine the classification of these three properties and briefly explain the reason of classification, address the accounting treatment and state whether depreciation is required, then, calculate the respective amounts to be recognized on the statement of Financial Position as at 31 December 2019. (Extracts of Financial Statement are not required) (13 marks)

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