On January 1, 2023, Blossom Ltd. acquires a building at a cost of $200,000. The building is expected to have a 20-year life and noresidual value. The asset is accounted for under the revaluation model, using the asset adjustment method. Revaluations are carriedout every three years. On December 31, 2025, the fair value of the building is appraised at $175,000, and on December 31, 2028, itsfair value is $120.000. Blossom applies IFRS.Prepare the journal entries required on December 31, 2028. (Credit account titles are automatically indented when the amount isentered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debitentries before credit entries. Round answers to O decimal places, e.g. 5,275.)Account Titles and ExplanationDepreciation ExpenseAccumulated Depreciation - Buildings(To record depreciation)Accumulated Depreciation - BuildingsBuildings(To eliminate the accumulated depreciation)BuildingsRevaluation Surplus (OCI)Accumulated Depreciation - Buildings(To adjust the Buildingsaccount to fair value)UDebit10,000300005,000CreditI10,000300005,000

Name: On January 1, 2023, Blossom Ltd. acquires a building at a cost of $20
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Description: On January 1, 2023, Blossom Ltd. acquires a building at a cost of $200,000. The building is expected to have a 20-year life and noresidual value. The asset is accounted for under the revaluation model, using the asset adjustment method. Revaluations

Journal entries :A Journal Entry is a record of the business transactions in the accounting books of…

Answered: esidual value. The asset is accounted…

Business

Accounting

esidual value. The asset is accounted for under t ut every three years. On December 31, 2025, th air value is $120.000. Blossom applies IFRS.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

Topic Video

Question

On January 1, 2023, Blossom Ltd. acquires a building at a cost of $200,000. The building is expected to have a 20-year life and no
residual value. The asset is accounted for under the revaluation model, using the asset adjustment method. Revaluations are carried
out every three years. On December 31, 2025, the fair value of the building is appraised at $175,000, and on December 31, 2028, its
fair value is $120.000. Blossom applies IFRS.
Prepare the journal entries required on December 31, 2028. (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.)
Account Titles and Explanation
Depreciation Expense
Accumulated Depreciation - Buildings
(To record depreciation)
Accumulated Depreciation - Buildings
Buildings
(To eliminate the accumulated depreciation)
Buildings
Revaluation Surplus (OCI)
Accumulated Depreciation - Buildings
(To adjust the Buildings
account to fair value)
U
Debit
10,000
30000
5,000
Credit
I
10,000
30000
5,000

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