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QUESTION $1$

Queens $($Pty$)$ Ltd is a company with a $31$ December year end. The companys mainbusiness is the buying and selling of sports equipment$\mathrm{.}2022$ Financial year:On $1$ March $2022,$ Queens $($Pty$)$ Ltd bought a property and paid R$9500000$ in cashfor the property. The property was bought with the intention of keeping it for investmentpurposes and a lease agreement was therefore entered into with a third party. In termsof the lease agreement, the third party will occupy Queens $($Pty$)$ Ltds property from $1$April $2022$ for a period of $24$ months$\mathrm{.}2023$ Financial year:The property continued to be rented out by Queens $($Pty$)$ Ltd to the third party for thefull financial year in terms of the lease agreement entered into during the $2022$ financialyear$\mathrm{.}2024$ Financial year:The lease agreement with the third party came to an end on $31$ March $2024.$ Queens$($Pty$)$ Ltd decided not to renew the lease agreement with the third party since theyrequire additional warehouse space, and therefore, effective $1$ April $2024,$ Queens$($Pty$)$ Ltd will use the property as one of their warehouses.Additional information: The company makes use of the fair value model to account for investment property. The following fair values were applicable to the property:o $31$ December $2022$ R$10000000$o $31$ December $2023$ R$9800000$o $1$ April $2024$ R$9900000$ Owner$-$occupied property is accounted for using the cost model. For all financial years, assume a corporate tax rate of $27\%$ and a capital gainsinclusion rate of $80\%.$

REQUIRED:

$1\mathrm{.}1)$ With reference to the information given, discuss how Queens $($Pty$)$ Ltd shouldclassify and recognise the property on $1$ March $2022.$

$1\mathrm{.}2)$ Prepare all the general journal entries required in the records of Queens $($Pty$)$Ltd to account for only the property for the $31$ December $2022$ financial year.Dates and narrations are not required. Round all calculated amounts to thenearest rand where applicable.$(9$ mark$)$

$1\mathrm{.}4)$ With reference to the requirements of IAS $40,$ discuss how Queens $($Pty$)$ Ltdshould account for the property in their records from $1$ April $2024.$ Include inyour discussion references to the applicable amounts.

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