Explain the key aspects of the ‘cost basis’ and ‘revaluation basis’ for non-current assets, and highlight the differences between them.
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Explain the key aspects of the ‘cost basis’ and ‘revaluation basis’ for non-current assets, and highlight the differences between them.
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- Assume the same information as in RE11-3, except that Albany Corporation purchased the asset on April 1, Year 1. Calculate the depreciation for Year 1 and Year 2 using the double-declining-balance method. Round to the nearest dollar.Dinnell Company owns the following assets: In the year of acquisition and retirement of an asset, Dinnell records depreciation expense for one-half year. During 2020, Asset A was sold for 7,000. Required: Prepare the journal entries to record depreciation on each asset for 2017 through 2020 and the sale of Asset A. Round all answers to the nearest dollar.On December 31, 2019, Vail Company owned the following assets: Vail computes depreciation and amortization expense to the nearest whole year. During 2020, Vail engaged in the following transactions: Required: 1. Check the accuracy of the accumulated depreciation balances at December 31, 2019. Round to the nearest whole dollar in all requirements. 2. Prepare journal entries to record the preceding events in 2020, as well as the year-end recording of depreciation expense. 3. Prepare an Accumulated Depreciation account for each category of assets, enter the beginning balance, post the journal entries from Requirement 2, and compute the ending balance.
- Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021, the entity classified a land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at P5,500,000 and the cost of disposal at P100,000. On December 31,2021, the fair value less cost of disposal of the land did not change. The land was sold on January 31,2022 for P6,000,000. Required: 1. What amount should be reported as impairment loss for 2021? a. 100,000 b. 400,000 c. 500,000 d. 0 2. What amount should be reported as revaluation surplus on December 31,2021? a. 1,500,000 b. 2,000,000 c. 1,000,000 d. 1,900,000Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021, the entity classified a land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at P5,500,000 and the cost of disposal at P100,000. On December 31,2021, the fair value less cost of disposal of the land did not change. The land was sold on January 31,2022 for P6,000,000. REQUIRED: 1. What amount should be reported as gain on disposal of land in 2022? a. 1,000,000 b. 2,600,000 c. 500,000 d. 600,000Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021, the entity classified a land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at P5,500,000 and the cost of disposal at P100,000. On December 31,2021, the fair value less cost of disposal of the land did not change. The land was sold on January 31,2022 for P6,000,000. Required: 1. What is the adjusted carrying amount of the land on December 31,2021? a. 5,000,000 b. 5,500,000 c. 5,400,000 d. 3,500,000
- Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021, the entity classified a land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at P5,500,000 and the cost of disposal at P100,000. On December 31,2021, the fair value less cost of disposal of the land did not change. The land was sold on January 31,2022 for P6,000,000. Required: 1. What is the adjusted carrying amount of the land on December 31,2021? a. 5,000,000 b. 5,500,000 c. 5,400,000 d. 3,500,000 2. What amount should be reported as impairment loss for 2021? a. 100,000 b. 400,000 c. 500,000 d. 0 3. What amount should be reported as revaluation surplus on December 31,2021? a. 1,500,000 b. 2,000,000 c. 1,000,000 d. 1,900,000 4. What amount should be reported as gain on disposal of land in 2022? a. 1,000,000 b. 2,600,000 c. 500,000 c. 600,000Happy Inc. accounted for noncurrent assets using the revaluation surplus model. On October 1, 2021, the entity classified a land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at P5,500,000 and the cost of disposal at P100,000. On December 31, 2021, the fair value less cost of disposal of the land did not change. The land was sold on January 31, 2022 for P6,000,000. What is the adjusted carrying amount of the land on December 31, 2021? A. 5,400,000B. 5,300,000C. 5,200,000D. 3,500,000Happy Inc. accounted for noncurrent assets using the revaluation surplus model. On October 1, 2021, the entity classified a land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At same date, the fair value of the land was estimated at P5,500,000 and the cost of disposal at P100,000. On December 31, 2021, the fair value less cost of disposal of the land did not change. The land was sold on January 31, 2022 for P6,000,000. Was is the impairment loss in 2021? A. 400,000B. 100,000C. 500,000D. 0
- The Salient company uses the revaluation model for its building. It acquired a building on January 1, 2018 for $450,000 cash. The useful life is 25 years and the residual value is $50,000. On December 31, 2019 and December 31, 2021, the fair value of the building was assessed at $422,000 and $380,000, respectively. Required- Prepare all the journal entries from January 1, 2018 to December 31, 2021. Determine the balance of the Accumulated Other Comprehensive Income (AOCI) account on December 31, 2019 and December 31, 2021, and specify whether it is a debit or a credit balance.lab Company’s accounting policy with respect to investment properties is to measure them at fair value at the end of each reporting period. One of its investment properties was measured at P8,000,000 on December 31, 2020.The property had been acquired on January 1, 2020 for a total of P7,600,000, made up of P6,900,000 paid to the vendor. P300,000 paid to the local authority as a property transfer tax and P400,000 paid to professional advisers. The useful life of the property is 40 years. What is the gain to be recognized in profit or loss for the year ended December 31, 2020 in respect of the investment property? * P400,000 P590,000 P700,000 P800,000 answer not givenAbba Company accounted for noncurrent assets using the revakuation model. On June 30,2021, the entity classified a land as held for sale. At that date, the carrying amount was P2,900,000 and the balance of the revaluation surplus was P200,000. On December 31,2021, the fair value was estimated at P3,250,000 and the cost of disposal at P250,000. Required: 1. What amount should be reported as revaluation surplus on December 31, 2021? a. 600,000 b. 400,000 c. 200,000 d. 300,000
