On 13 February 20X5, Reekwa Company purchased an office tower for $31.1 million. The office is a mixed-use property: it is owner- occupied and includes rental units. The fair value of the building on 31 December 20X6 is $31.5 million and $28.0 million on 31 December 20X8. At the time of purchase, the office tower has a remaining useful life of 25 years, and is amortized on a straight-line basis. Required: 1. Should the office tower be considered property, plant, and equipment or investment property? O Property, plant, and equipment Investment property 2. Assume the property is determined to be PPE, and management applies the elimination method for the revaluation model. Prepare the required journal entries for the revaluation of the office tower in 20X6 and 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date 1 31 December 20X No journal entry required 2 31 December 20X8 Accounts payable General Journal Debit Credit 3. Assume the property is determined to be PPE, and management applies the proportionate method for the revaluation model. Prepare the required journal entries for the revaluation of the office tower in 20X6 and 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date General Journal 1 31 December 20X6 Building Accumulated depreciation 2 31 December 20X8 Debit Credit ×
On 13 February 20X5, Reekwa Company purchased an office tower for $31.1 million. The office is a mixed-use property: it is owner- occupied and includes rental units. The fair value of the building on 31 December 20X6 is $31.5 million and $28.0 million on 31 December 20X8. At the time of purchase, the office tower has a remaining useful life of 25 years, and is amortized on a straight-line basis. Required: 1. Should the office tower be considered property, plant, and equipment or investment property? O Property, plant, and equipment Investment property 2. Assume the property is determined to be PPE, and management applies the elimination method for the revaluation model. Prepare the required journal entries for the revaluation of the office tower in 20X6 and 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date 1 31 December 20X No journal entry required 2 31 December 20X8 Accounts payable General Journal Debit Credit 3. Assume the property is determined to be PPE, and management applies the proportionate method for the revaluation model. Prepare the required journal entries for the revaluation of the office tower in 20X6 and 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date General Journal 1 31 December 20X6 Building Accumulated depreciation 2 31 December 20X8 Debit Credit ×
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On 13 February 20X5, Reekwa Company purchased an office tower for $31.1 million. The office is a mixed-use property: it is owner-
occupied and includes rental units. The fair value of the building on 31 December 20X6 is $31.5 million and $28.0 million on 31
December 20X8.
At the time of purchase, the office tower has a remaining useful life of 25 years, and is amortized on a straight-line basis.
Required:
1. Should the office tower be considered property, plant, and equipment or investment property?
Property, plant, and equipment
Investment property
2. Assume the property is determined to be PPE, and management applies the elimination method for the revaluation model. Prepare
the required journal entries for the revaluation of the office tower in 20X6 and 20X8. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
No
1
Date
31 December 20X6 No journal entry required
2
31 December 20X8
Accounts payable
General Journal
Debit
× ×
Credit
3. Assume the property is determined to be PPE, and management applies the proportionate method for the revaluation model.
Prepare the required journal entries for the revaluation of the office tower in 20X6 and 20X8. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
No
Date
1
31 December 20X6 Building
Accumulated depreciation
2
31 December 20X8
General Journal
Debit
Credit
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