On July 1, 2020, Bramble Ltd., a publicly listed company, acquired assets from Sheffield Ltd. On the transaction date, a reliable, independent valuator assessed the fair values of these assets as follows: Manufacturing plant (building #1) $399,540 Storage warehouse (building #2) 209,500 Machinery (in building #1) 74,700 Machinery (in building #2) 44,100 The buildings are owned by the company, and the land that the buildings are situated on is owned by the local municipality and is provided free of charge to the owner of the buildings to encourage local employment. In exchange for the acquisition of these assets, Bramble issued 145,530 common shares. Bramble’s shares are thinly traded (that is, traded in relatively low volume leading to more volatile price changes than most public companies). In the most recent sale of Bramble’s shares on the Toronto Stock Exchange, 510 shares were sold for $5 per share. At the time of acquisition, both buildings were considered to have an expected remaining useful life of 10 years, the machinery in building #1 was expected to have a remaining useful life of 3 years, and the machinery in building #2 was expected to have a useful life of 9 years. Bramble uses straight-line depreciation with no residual values. At December 31, 2020, Bramble’s fiscal year end, Bramble recorded the correct depreciation amounts for the six months that the assets were in use. An independent appraisal concluded that the assets had the following fair values: Manufacturing plant (building #1) $385,700 Storage warehouse (building #2) 178,600 At December 31, 2021, Bramble once again retained an independent appraiser and determined that the fair value of the assets was: Manufacturing plant (building #1) $339,680 Storage warehouse (building #2) 160,890 1. Prepare the journal entries required for 2020 and 2021, assuming that the buildings are accounted for under the revaluation model (using the asset adjustment method), and that the machinery is accounted for under the cost model. 2. Assume that the asset revaluation surplus for the buildings was prepared based on a class-by-class basis rather than on an individual asset basis as required by IAS 16. Prepare the journal entries for 2020 and 2021 that relate to the buildings. (Ignore the machinery accounts sinc
On July 1, 2020, Bramble Ltd., a publicly listed company, acquired assets from Sheffield Ltd. On the transaction date, a reliable, independent valuator assessed the fair values of these assets as follows:
| Manufacturing plant (building #1) | $399,540 | |
| Storage warehouse (building #2) | 209,500 | |
| Machinery (in building #1) | 74,700 | |
| Machinery (in building #2) | 44,100 |
The buildings are owned by the company, and the land that the buildings are situated on is owned by the local municipality and is provided free of charge to the owner of the buildings to encourage local employment.
In exchange for the acquisition of these assets, Bramble issued 145,530 common shares. Bramble’s shares are thinly traded (that is, traded in relatively low volume leading to more volatile price changes than most public companies). In the most recent sale of Bramble’s shares on the Toronto Stock Exchange, 510 shares were sold for $5 per share. At the time of acquisition, both buildings were considered to have an expected remaining useful life of 10 years, the machinery in building #1 was expected to have a remaining useful life of 3 years, and the machinery in building #2 was expected to have a useful life of 9 years. Bramble uses straight-line
At December 31, 2020, Bramble’s fiscal year end, Bramble recorded the correct depreciation amounts for the six months that the assets were in use. An independent appraisal concluded that the assets had the following fair values:
| Manufacturing plant (building #1) | $385,700 | |
| Storage warehouse (building #2) | 178,600 |
At December 31, 2021, Bramble once again retained an independent appraiser and determined that the fair value of the assets was:
| Manufacturing plant (building #1) | $339,680 | |
| Storage warehouse (building #2) | 160,890 |
1. Prepare the
2. Assume that the asset revaluation surplus for the buildings was prepared based on a class-by-class basis rather than on an individual asset basis as required by IAS 16. Prepare the journal entries for 2020 and 2021 that relate to the buildings. (Ignore the machinery accounts since they are accounted for using the cost model.
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