Answered: Sparkling Company uses IFRS. After 3…

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

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...

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Question

Sparkling Company uses IFRS. After 3 full years of use, the Sparkling Company revalues equipment with a carrying value of $990,000 to its fair value of $1,800,000 using the accumulated depreciation elimination method. The original cost of the equipment is $1,700,000 and the equipment has a useful life of 10 years with no scrap value. Sparkling Company depreciates under the straight-line method. How much is the revaluation gain or loss? Where does Sparkling Company report any unrealized gain or loss from the revaluation in the financial statements?

Group of answer choices

$810,000 unrealized gain in revaluation surplus reported in other comprehensive income in statement of comprehensive income

$810,000 unrealized gain in continuing operations of statement of comprehensive income

$710,000 recovery of unrealized loss reported in other comprehensive income in statement of comprehensive income

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