A partial statement of financial position of Ivanhoe 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): Buildings Less: Accumulated depreciation Equipment Less: Accumulated depreciation $294,000 94,000 $125,000 45,000 $200,000 Ivanhoe 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). Ivanhoe 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 $146,000 and that of the equipment to be $100,000. Account Titles and Explanation 80,000 Prepare the necessary general journal entries, if any, to revalue the building and the equipment as at December 31, 2022, using the proportionate 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. Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 5,275.) (To record revaluation of the building) Debit Credit
A partial statement of financial position of Ivanhoe 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): Buildings Less: Accumulated depreciation Equipment Less: Accumulated depreciation $294,000 94,000 $125,000 45,000 $200,000 Ivanhoe 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). Ivanhoe 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 $146,000 and that of the equipment to be $100,000. Account Titles and Explanation 80,000 Prepare the necessary general journal entries, if any, to revalue the building and the equipment as at December 31, 2022, using the proportionate 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. Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 5,275.) (To record revaluation of the building) Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:A partial statement of financial position of Ivanhoe 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):
Buildings
Less: Accumulated depreciation
Equipment
Less: Accumulated depreciation
$294,000
94,000 $200,000
$125,000
45,000
Ivanhoe 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). Ivanhoe 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 $146,000 and that of the equipment to be $100,000.
(To adjust the Equipment
account to fair value)
Prepare the necessary general journal entries, if any, to revalue the building and the equipment as at December 31, 2022, using
the proportionate 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. Do not round intermediate calculations. Round final answers to 0 decimal places, e.g.
5,275.)
Account Titles and Explanation
80,000
(To record revaluation of the building)
Debit
00
Credit
100 000
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