Silic Case

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Accy 510 Silic Case Homework Assignment Name: Yue (Josie) Deng Date: June 11, 2012 #1 On 01/01/2003, Silic should record the one-off, fair-value revaluation as result of its adoption of SIIC tax regime. Because the building was appraised at €12,500 and originally bought at €10,000, the firm needs to make a journal entry to account for this increase in value 01/01/2003 Buildings & Land €2,500 Revaluation Surplus €2,500 * Land & Building = €12,500 - €10,000 = €2,500 * As we learned in class from reading Silic’s financial statements, 82.9% of the unrealized gains from revaluation will flow to the Revaluation Surplus account and 17.1% will flow to the Other Creditors account. * €2,500 * 82.9% =…show more content…
40 would require Silic to mark its investment properties to fair value during each reporting period, and report the gains and losses on its income statement. As indicated in the case, French real estate market had experienced substantial upward and downward movements in the value of properties. Thus, a probable outcome of fair value accounting would be a significant fluctuation in the firm’s bottom line during each reporting period. Fluctuations in net income signals great risk of the financial performance of an entity. A normal risk averse investors would not invest in an company that poses significant risk. Therefore, I believe historical cost accounting would present Silic in the most favorable light over
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