Gahal Ltd. has a fiscal year ending on December 31. The company owns a building that it purchased on January 1, 2023, for $6,000,000 (excluding the land value). Management estimates the useful life to be 30 years, with no residual value. The company uses the - straight line depreciation method. The following additional information is available. Dec 31, 2023 - Fair value: $6,100,000 Dec 31, 2024 - Fair value: $ 5,000,000 (The local economy has gone into a significant recession and real estate values have declined.) Required: The company uses the revaluation model (asset adjustment method) to account for its property, plant, and equipment. Prepare the year - end adjusting entries for 2023 and 2024 (Round to the nearest dollar).

Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.5E: Change in Estimate Assume that Bloomer Company purchased a new machine on January 1, 2016, for...
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Gahal Ltd. has a fiscal year ending on December 31.
The company owns a building that it purchased on
January 1, 2023, for $6,000,000 (excluding the land
value). Management estimates the useful life to be 30
years, with no residual value. The company uses the
-
straight line depreciation method. The following
additional information is available. Dec 31, 2023 - Fair
value: $6,100,000 Dec 31, 2024 - Fair value: $
5,000,000 (The local economy has gone into a
significant recession and real estate values have
declined.) Required: The company uses the revaluation
model (asset adjustment method) to account for its
property, plant, and equipment. Prepare the year - end
adjusting entries for 2023 and 2024 (Round to the
nearest dollar).
Transcribed Image Text:Gahal Ltd. has a fiscal year ending on December 31. The company owns a building that it purchased on January 1, 2023, for $6,000,000 (excluding the land value). Management estimates the useful life to be 30 years, with no residual value. The company uses the - straight line depreciation method. The following additional information is available. Dec 31, 2023 - Fair value: $6,100,000 Dec 31, 2024 - Fair value: $ 5,000,000 (The local economy has gone into a significant recession and real estate values have declined.) Required: The company uses the revaluation model (asset adjustment method) to account for its property, plant, and equipment. Prepare the year - end adjusting entries for 2023 and 2024 (Round to the nearest dollar).
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