(c) Pablo vacated an office building and let it out to a third party on 1 July 2020.The building had an original cost of $1,200,000 on 1 January 2015 and wasbeing depreciated over 40 years using the double declining balance methoduntil 31st December 2016. The estimated residual value of the building is$283,000. On 1 January 2017, the company decided to switch to straight-linedepreciation with no change in the estimated residual value of the building. Thebuilding was judged to have a fair value on 1 July 2020 of $809,316. At theyear-end date of 31" December 2020, the fair value of the building wasestimated at $960,000.ii.Pablo uses the fair value model for investment property.RequiredWhat amount will be shown as revaluation surplus (deficit) on 31 December2020 in respect of this building? Round your answer to the nearest $.Answer1.What amount will be credited or debited to profit or loss for the year ended 31stDecember 2020? State whether this amount is a profit or loss.AnswerPage 3 of 9

A revaluation surplus or deficit is the amount which is ascertained due to the reason behind the…

L What amount will be shown as revaluation surplus (deficit) on 31 December 2020 in respect of this building? Round your answer to the nearest $. Answer ii. What amount will be credited or debited to profit or loss for the year ended 31st December 2020? State whether this amount is a profit or loss.

L What amount will be shown as revaluation surplus (deficit) on 31 December 2020 in respect of this building? Round your answer to the nearest $. Answer ii. What amount will be credited or debited to profit or loss for the year ended 31st December 2020? State whether this amount is a profit or loss.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 8P: At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the...

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.
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On December 31, 2020, before the books were closed, the management and accountants of Sweet Inc. made the following determinations about three pieces of equipment. 1. Equipment A was purchased January 2, 2017. It originally cost $543,000 and, for depreciation purposes, the straight-line method was originally chosen. The asset was originally expected to be useful for 10 years and have a zero salvage value. In 2020, the decision was made to change the depreciation method from straight-line to sum-of-the-years'-digits, and the estimates relating to useful life and salvage value remained unchanged. Equipment B was purchased January 3, 2016. It originally cost $187,500 and, for depreciation purposes, the straight-line method was chosen. The asset was originally expected to be useful for 15 years and have a zero residual value. In 2020, the decision was made to shorten the total life of this asset to 9 years and to estimate the residual value at $3,000. 2. Equipment C was purchased January…
On December 31, 2020, before the books were closed, the management and accountants of Madrasa Inc. made the following determinations about three pieces of equipment. 1. Equipment A was purchased January 2, 2017. It originally cost $540,000 and, for depreciation purposes, the straight-line method was originally chosen. The asset was originally expected to be useful for 10 years and have a zero salvage value. In 2020, the decision was made to change the depreciation method from straight-line to sum-of-the-years'-digits, and the estimates relating to useful life and salvage value remained unchanged. 2. Equipment B was purchased January 3, 2016. It originally cost $180,000 and, for depreciation purposes, the straight-line method was chosen. The asset was originally expected to be useful for 15 years and have a zero residual value. In 2020, the decision was made to shorten the total life of this asset to 9 years and to estimate the residual value at $3,000. 3. Equipment C was purchased…