The historical cost of land and building of Airbag Ltd that purchased three years ago are $500 000 and $2 000 000 respectively. The building is depreciated using the straight- line method over a 20-year useful life with no residual value and land assume to have an indefinite useful life. Airbag Ltd decides to switch to a revaluation model for Building. The fair value of the building is $1 300 000 and the tax rate is 25 percent (25%). As a result of revaluation, the building's useful life increases to 25 years. REQUIRED Provide the journal entries to record the revaluation.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The historical cost of land and building of Airbag Ltd that purchased three years ago are
$500 000 and $2000 000 respectively. The building is depreciated using the straight-
line method over a 20-year useful life with no residual value and land assume to have an
indefinite useful life. Airbag Ltd decides to switch to a revaluation model for Building.
The fair value of the building is $1 300 000 and the tax rate is 25 percent (25%). As a
result of revaluation, the building's useful life increases to 25 years.
REQUIRED
Provide the journal entries to record the revaluation.
Transcribed Image Text:The historical cost of land and building of Airbag Ltd that purchased three years ago are $500 000 and $2000 000 respectively. The building is depreciated using the straight- line method over a 20-year useful life with no residual value and land assume to have an indefinite useful life. Airbag Ltd decides to switch to a revaluation model for Building. The fair value of the building is $1 300 000 and the tax rate is 25 percent (25%). As a result of revaluation, the building's useful life increases to 25 years. REQUIRED Provide the journal entries to record the revaluation.
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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