On December 31, 2019, Aquinas Company had equipment that had a carrying amount of $300,000 which the company wrote down to its $250,000 fair value. At the end of 2020 it was determined that the fair value of the equipment had risen to $320,000. At December 31, 2020, assuming Aquinas does not intend to dispose of the equipment, how should Aquinas record the change in fair value of the equipment? A. The carrying amount of the equipment should not change except for the depreciation taken in 2020. B. The equipment should reflect the new cost basis of $300,000. C. The equipment should reflect the new cost basis of $320,000. D. The equipment should reflect the new cost basis of $270,000.

On December 31, 2019, Aquinas Company had equipment that had a carrying amount of $300,000 which the company wrote down to its $250,000 fair value. At the end of 2020 it was determined that the fair value of the equipment had risen to $320,000. At December 31, 2020, assuming Aquinas does not intend to dispose of the equipment, how should Aquinas record the change in fair value of the equipment? A. The carrying amount of the equipment should not change except for the depreciation taken in 2020. B. The equipment should reflect the new cost basis of $300,000. C. The equipment should reflect the new cost basis of $320,000. D. The equipment should reflect the new cost basis of $270,000.

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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Question

On December 31, 2019, Aquinas Company had equipment that had a carrying amount of
$300,000 which the company wrote down to its $250,000 fair value. At the end of 2020 it was
determined that the fair value of the equipment had risen to $320,000. At December 31, 2020,
assuming Aquinas does not intend to dispose of the equipment, how should Aquinas record the
change in fair value of the equipment?
A. The carrying amount of the equipment should not change except for the depreciation taken in
2020.
B. The equipment should reflect the new cost basis of $300,000.
C. The equipment should reflect the new cost basis of $320,000.
D. The equipment should reflect the new cost basis of $270,000.

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