A partial statement of financial position of Blossom Ltd. on December 31, 2022, showed the following property, plant, and equipment assets accounted for under the cost model (accumulated depreciation includes depreciation for 2022): == Less: Accumulated depreciation 103,000 $200,000 $125,000 Less: Accumulated depreciation Buildings Equipment (a) Your answer is correct. Blossom uses straight-line depreciation for its building (remaining useful life of 20 years, no residual value) and for its equipment (remaining useful life of 8 years, no residual value). Blossom applies IFRS and has decided to adopt the revaluation model for its building and equipment, effective December 31, 2022. On this date, an independent appraiser assessed the fair value of the building to be $149,000 and that of the equipment to be $110,000. Account Titles and Explanation Prepare the necessary general journal entries, if any, to revalue the building and the equipment as at December 31, 2022, using the asset adjustment method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Accumulated Depreciation - Buildings Buildings Revaluation Gain or Loss (To eliminate the accumulated depreciation) Buildings (To adjust the Buildings account to fair value) $303,000 Equipment Accumulated Depreciation - Equipment (To eliminate the accumulated depreciation) 45,000 Equipment Revaluation Surplus (OCI) (To adjust the Equipment account to fair value) 80,000 Debit 103000 51000 45000 30000 Credit [ALI 103000 51000 45000 30000
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Please choose from the following accounts:
Accounts Payable
Accumulated Depreciation - Equipment
Accumulated Depreciation - Leasehold Improvements
Accumulated Depreciation - Machinery
Accumulated Depreciation - Vehicle Overhaul
Accumulated Depreciation - Vehicles
Advertising Expense
Asset Retirement Obligation
Buildings
Cash
Common Shares
Contributed Surplus - Donated Capital
Cost of Goods Sold
Deferred Revenue - Government Grants
Depreciation Expense
Donation Revenue
Equipment
Finance Expense
Gain on Disposal of Buildings
Gain on Disposal of Equipment
Gain on Disposal of Machinery
Gain on Disposal of Vehicles
Gain on Vehicle Overhaul
Gain or Loss in Value of Investment Property
GST Receivable
Interest Expense
Interest Payable
Inventory
Investment Property
Land
Land Improvements
Legal Expense
Loss on Disposal of Buildings
Loss on Disposal of Equipment
Loss on Disposal of Machinery
Loss on Disposal of Vehicles
Loss on Vehicle Overhaul
Machinery
Mineral Resources
Mortgage Payable
No Entry
Notes Payable
Office Expense
Prepaid Expenses
Prepaid Insurance
Purchase Discounts
Repairs and Maintenance Expense
Revaluation Gain or Loss
Revaluation Surplus (AOCI)
Revaluation Surplus (OCI)
Revenue - Government Grants
Salaries and Wages Expense
Sales Revenue
Service Revenue
Supplies
Tenant Deposits Liability
Vehicle Overhaul
Vehicles
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