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On 13 February 20X5, Reekwa Company purchased an office tower for $31.6 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 $32.0 million and $28.5 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 O 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.)

On 13 February 20X5, Reekwa Company purchased an office tower for $31.6 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 $32.0 million and $28.5 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 O 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.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On 13 February 20X5, Reekwa Company purchased an office tower for $31.6 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 $32.0 million and $28.5 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 O 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.) View transaction list Journal entry worksheet 2 Record the revaluation of office tower purchased for $31.6 million on 13 February 20x5 under elimination method. The fair value of the building on 31 December 20x6 is $32 million. Note: Enter debits before credits. Date 31 December 20X6 General Journal Building Accumulated depreciation Forw Debit Credit >
Transcribed Image Text:On 13 February 20X5, Reekwa Company purchased an office tower for $31.6 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 $32.0 million and $28.5 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 O 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.) View transaction list Journal entry worksheet 2 Record the revaluation of office tower purchased for $31.6 million on 13 February 20x5 under elimination method. The fair value of the building on 31 December 20x6 is $32 million. Note: Enter debits before credits. Date 31 December 20X6 General Journal Building Accumulated depreciation Forw Debit Credit >
On 13 February 20X5, Reekwa Company purchased an office tower for $31.6 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 $32.0 million and $28.5 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 O 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.) View transaction list Journal entry worksheet 2 Record the revaluation of office tower purchased for $31.6 million on 13 February 20x5 under elimination method. The fair value of the building on 31 December 20X8 is $28.5 million. Note: Enter debits before credits. Date 31 December 20X8 OC Gain reversal General Journal Oci: Loss on revaluation Debit Credit
Transcribed Image Text:On 13 February 20X5, Reekwa Company purchased an office tower for $31.6 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 $32.0 million and $28.5 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 O 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.) View transaction list Journal entry worksheet 2 Record the revaluation of office tower purchased for $31.6 million on 13 February 20x5 under elimination method. The fair value of the building on 31 December 20X8 is $28.5 million. Note: Enter debits before credits. Date 31 December 20X8 OC Gain reversal General Journal Oci: Loss on revaluation Debit Credit
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