u Ltd. acquired an excavator on January 1, 2020, for ¥10,000 (all amounts in thousands). This excavator represents the company’s only piece of equipment, and Su chooses revaluation accounting. This excavator is being depreciated on a straight-line basis over its 10-year useful life. There is no residual value at the end of the 10-year period. The appraised value of the excavator approximates the carrying value at December 31, 2020 and 2022. On December 31, 2021, the fair value is determined to be ¥8,800; on December 31, 2023, the fair value is determined to be ¥5,000. a. Show all journal entries for each year-end from 2020 through 2023. b. Su also owns some property and buildings for which revaluation accounting is not used. Briefly discuss why Su might not use revaluation accounting for these assets.

u Ltd. acquired an excavator on January 1, 2020, for ¥10,000 (all amounts in thousands). This excavator represents the company’s only piece of equipment, and Su chooses revaluation accounting. This excavator is being depreciated on a straight-line basis over its 10-year useful life. There is no residual value at the end of the 10-year period. The appraised value of the excavator approximates the carrying value at December 31, 2020 and 2022. On December 31, 2021, the fair value is determined to be ¥8,800; on December 31, 2023, the fair value is determined to be ¥5,000. a. Show all journal entries for each year-end from 2020 through 2023. b. Su also owns some property and buildings for which revaluation accounting is not used. Briefly discuss why Su might not use revaluation accounting for these assets.

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 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...

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Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
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.
On January 1, 2018, Hot Corporation acquired equipment at a cost of ₱1,800,000. Hot adopted the sum-of-the-years’-digits method of depreciation for this equipment and had been recording depreciation over an estimated life of eight years, with no residual value. At the beginning of 2021, a decision was made to change to the straight-line method of depreciation for this equipment. The depreciation expense for 2021 would be:
Waterway Ltd. acquired an excavator on January 1, 2020, for ¥11,600 (all amounts in thousands). This excavator represents the company's only piece of equipment, and Waterway chooses revaluation accounting. This excavator is being depreciated on a straight- line basis over its 10-year useful life. There is no residual value at the end of the 10-year period. The appraised value of the excavator approximates the carrying value at December 31, 2020 and 2022. On December 31, 2021, the fair value is determined to be ¥10,208; on December 31, 2023, the fair value is determined to be ¥5,800. (a) Show all journal entries for each year-end from 2020 through 2023. (If no entry is required, select "No entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit
Su Ltd. acquired an excavator on January 1, 2020, for ¥10,000 (all amounts in thousands). This excavator represents the company’s only piece of equipment, and Su chooses revaluation accounting. This excavator is being depreciated on a straight-line basis over its 10-year useful life. There is no residual value at the end of the 10-year period. The appraised value of the excavator approximates the carrying value at December 31, 2020 and 2022. On December 31, 2021, the fair value is determined to be ¥8,800; on December 31, 2023, the fair value is determined to be ¥5,000. Instructions Show all journal entries for each year-end from 2020 through 2023 by applying: a. elimination method b. proportional method
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