Current Attempt in Progress Pharoah Motels Inc. owns a motel that it had purchased on January 1, 2023, for $3.90 million cash and is accounted for in a separate account, classified as "Buildings." The company is using the revaluation model to account for its buildings and revalues them annually. Aden uses straight-line depreciation over the asset's 15-year useful life with no residual value. The asset's fair value was equal to its carrying amount on Dec. 31, 2023, and was $3,850,000 on Dec. 31, 2024. Assuming Pharoah uses the proportionate method to adjust for revaluation, prepare all required journal entries for 2023 and 2024. (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 0 decimal places, e.g. 5,275. Do not round intermediate calculations.) Date Account Titles and Explanation Debit Credit
Current Attempt in Progress Pharoah Motels Inc. owns a motel that it had purchased on January 1, 2023, for $3.90 million cash and is accounted for in a separate account, classified as "Buildings." The company is using the revaluation model to account for its buildings and revalues them annually. Aden uses straight-line depreciation over the asset's 15-year useful life with no residual value. The asset's fair value was equal to its carrying amount on Dec. 31, 2023, and was $3,850,000 on Dec. 31, 2024. Assuming Pharoah uses the proportionate method to adjust for revaluation, prepare all required journal entries for 2023 and 2024. (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 0 decimal places, e.g. 5,275. Do not round intermediate calculations.) Date Account Titles and Explanation 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:Current Attempt in Progress
Pharoah Motels Inc. owns a motel that it had purchased on January 1, 2023, for $3.90 million cash and is accounted for in a separate
account, classified as "Buildings." The company is using the revaluation model to account for its buildings and revalues them annually.
Aden uses straight-line depreciation over the asset's 15-year useful life with no residual value.
The asset's fair value was equal to its carrying amount on Dec. 31, 2023, and was $3,850,000 on Dec. 31, 2024.
Assuming Pharoah uses the proportionate method to adjust for revaluation, prepare all required journal entries for 2023 and 2024.
(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. Do
not round intermediate calculations.)
Date
>
<
Account Titles and Explanation
(To record 2024 depreciation)
(To adjust the Buildings account to fair value)
Debit
Credit
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