Blue Spruce Corporation is a public company that manufactures farm implements, such as tractors, combines, and wagons. Blue Spruce uses the revaluation model per IAS 16, and records asset revaluations using the elimination method. (This means the balance in the Accumulated Depreciation account is eliminated against the asset account just prior to revaluation of the asset to fair value.) A piece of manufacturing equipment included in the property, plant, and equipment section on Blue Spruce's statement of financial position was purchased on December 31, 2022, for a cost of $111,000. The equipment was expected to have a remaining useful life of 5 years, with benefits being received evenly over the 5 years. Residual value of the equipment was estimated to be $11,000. Consider the following two situations: Situation 1: At December 31, 2023, no formal revaluation is performed, as management determines that the carrying amount of the property, plant, and equipment is not materially different from its fair value. Situation 2: At December 31, 2023, a formal revaluation is performed and the independent appraisers assess the equipment's fair value to be $100,000. During the revaluation process, it is determined that the remaining useful life of the equipment is four years, with a residual value of $12,000.
Blue Spruce Corporation is a public company that manufactures farm implements, such as tractors, combines, and wagons. Blue Spruce uses the revaluation model per IAS 16, and records asset revaluations using the elimination method. (This means the balance in the Accumulated Depreciation account is eliminated against the asset account just prior to revaluation of the asset to fair value.) A piece of manufacturing equipment included in the property, plant, and equipment section on Blue Spruce's statement of financial position was purchased on December 31, 2022, for a cost of $111,000. The equipment was expected to have a remaining useful life of 5 years, with benefits being received evenly over the 5 years. Residual value of the equipment was estimated to be $11,000. Consider the following two situations: Situation 1: At December 31, 2023, no formal revaluation is performed, as management determines that the carrying amount of the property, plant, and equipment is not materially different from its fair value. Situation 2: At December 31, 2023, a formal revaluation is performed and the independent appraisers assess the equipment's fair value to be $100,000. During the revaluation process, it is determined that the remaining useful life of the equipment is four years, with a residual value of $12,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Please answer the following question
Must choose from the following LIST OF ACCOUNTS:
Accumulated Depletion
Accumulated Depreciation - Buildings
Accumulated Depreciation - Equipment
Accumulated Depreciation - Furniture and Fixtures
Accumulated Depreciation - Machinery
Accumulated Depreciation - Vehicles
Accumulated Impairment Losses - Building
Accumulated Impairment Losses - Equipment
Accumulated Impairment Losses - Land
Accumulated Impairment Losses - Machinery
Accumulated Impairment Losses - Mine
Accumulated Impairment Losses - Patents
Accumulated Impairment Losses - Tools and Dies
Accumulated Impairment Losses - Vehicles
Asset Retirement Obligation
Buildings
Cash
Common Shares
Contribution Expense
Cost of Goods Sold
Deferred Revenue - Government Grants
Depreciation Expense
Equipment
Furniture and Fixtures
Gain on Disposal of Automobiles
Gain on Disposal of Building
Gain on Disposal of Equipment
Gain on Disposal of Furniture and Fixtures
Gain on Disposal of Machinery
Gain on Disposal of Vehicles
Gain on Sale of Land
Interest Expense
Interest Pavable
Inventory
Investment Property
Land
Liability for Site Restoration
Loss on Disposal of Automobiles
Loss on Disposal of Building
Loss on Disposal of Equipment
Loss on Disposal of Machinery
Loss on Disposal of Vehicles
Loss on Expropriation
Loss on Impairment
Loss on Sale of Land
Machinery
Mineral Resources
No Entry
Notes Payable
Oil Property
Recovery of Loss from Impairment
Repairs and Maintenance Expense
Revaluation Surplus (OCI)
Revenue - Government Grants
Royalty Expense
Vehicles
Transcribed Image Text:Blue Spruce Corporation is a public company that manufactures farm implements, such as tractors, combines, and wagons. Blue
Spruce uses the revaluation model per IAS 16, and records asset revaluations using the elimination method. (This means the balance in
the Accumulated Depreciation account is eliminated against the asset account just prior to revaluation of the asset to fair value.) A
piece of manufacturing equipment included in the property, plant, and equipment section on Blue Spruce's statement of financial
position was purchased on December 31, 2022, for a cost of $111,000. The equipment was expected to have a remaining useful life of
5 years, with benefits being received evenly over the 5 years. Residual value of the equipment was estimated to be $11,000.
Consider the following two situations:
Situation 1: At December 31, 2023, no formal revaluation is performed, as management determines that the carrying amount of the
property, plant, and equipment is not materially different from its fair value.
Situation 2: At December 31, 2023, a formal revaluation is performed and the independent appraisers assess the equipment's fair
value to be $100,000. During the revaluation process, it is determined that the remaining useful life of the equipment is four years,
with a residual value of $12,000.
At December 31, 2024, no formal revaluation is performed, as management determines that the carrying amount of the property,
plant, and equipment is not materially different from its fair value. The equipment is sold on March 31, 2025, for $69,000.
(a)
Prepare any journal entries required under situation 1 described above for: (1) the fiscal year ended December 31, 2023; (2) the
fiscal year ended December 31, 2024; and (3) the disposal of the equipment on March 31, 2025. (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.)
No.
(1)
(2)
Your answer is correct.
(3)
Date
December 31, 2023 V
December 31, 2024
March 31, 2025
March 31, 2025
Account Titles and Explanation
Depreciation Expense
Accumulated Depreciation - Equipment
Depreciation Expense
Accumulated Depreciation - Equipment
Depreciation Expense
Accumulated Depreciation - Equipment
(To record depreciation on equipment)
Cash
Accumulated Depreciation - Equipment
Equipment
Gain on Disposal of Equipment
(To record disposal of equipment)
Debit
20000
20000
5000
69000
45000
Transcribed Image Text:Prepare any journal entries required under situation 2 described above for: (1) the fiscal year ended December 31, 2023; (2) the
fiscal year ended December 31, 2024; and (3) the disposal of the equipment on March 31, 2025. (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. Round answers to O decimal places, e.g. 5,275.)
Date
December 31, 2023
December 31, 2023
December 31, 2023
December 31, 2024
March 31, 2025
March 31, 2025
Account Titles and Explanation
Depreciation Expense
Accumulated Depreciation - Equipment
(To record depreciation of equipment)
Accumulated Depreciation - Equipment
Equipment
(To eliminate the accumulated depreciation)
Equipment
Revaluation Surplus (OCI)
(To adjust the equipment account to fair value)
Depreciation Expense
Accumulated Depreciation - Equipment
(To record depreciation on equipment)
Depreciation Expense
Accumulated Depreciation - Equipment
(To record depreciation on equipment)
Cash
Accumulated Depreciation - Equipment
(To record disposal of equipment)
Debit
20000
1010
20000
22000
69000
Cr
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