Good Ltd & Better Ltd: Financial Accounting- Report Writing Assignment

Internal Code: MAS1319

Report Writing Assignment:

Scenario: On 1 January 2016, Good Ltd acquired a block of land for $100,000 cash, and on the same day Better Ltd purchased the adjacent block, which was virtually identical to the block purchased by Good Ltd, also for $100,000 cash. Both companies intended to construct industrial warehouses on these properties. For the next 2 years, the property market went through a boom period and by coincidence, on 30 June 2018, both companies obtained independent valuations of $180,000 for their blocks of land. Good Ltd has decided to adopt the revaluation model for land in the accounts on the last day of the year ended 30 June 2018 by following the requirements of IAS 16/AASB. Better Ltd decided to use the cost model. On the 30 April 2019, each company sold its block of land for $200,000 cash. Required: What profit would Good Ltd have made for the year ended 30 June 2019 if the revaluation of land occurred on 29 April 2019, instead of on 30 June 2018? Compare this with the profit made by Better Ltd in the same year, and explain whether you regard the differences as satisfactory reporting.