rple Company acquires an office building at a cost of $1,000 on January 1, 2021. The building expects to have a 30-year useful life with residual value of $100 at the end of the estimated useful life. The asset is accounted for under the revaluation model (proportional method) and revaluations are carried out every year. The company uses the straight-line method to record depreciation and both the useful life and residual value remain unchanged throughout revaluation. Also assume that the company always adjusts for depreciation expense difference under the revaluation model and the cost model. The fair value of the office building is appraised at $1,100, $900 and $1,000 on December 31, 2021, 2022 and 2023, respectively. a.Determine the amount for “Changes in Revaluation Surplus” to be reported on the Statement of Comprehensive Income on December 31, 2023. Round your answer to the nearest dollar if necessary. (Hint: if it is other comprehensive loss, please use a negative sign for your answer b.Determine the amount for “Revaluation Surplus” to be reported on the Statement of Financial Position on December 31, 2023. Round your answer to the nearest dollar if necessary.
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.
Purple Company acquires an office building at a cost of $1,000 on January 1, 2021. The building expects to have a 30-year useful life with residual value of $100 at the end of the estimated useful life. The asset is accounted for under the revaluation model (proportional method) and revaluations are carried out every year. The company uses the straight-line method to record
a.Determine the amount for “Changes in Revaluation Surplus” to be reported on the Statement of Comprehensive Income on December 31, 2023. Round your answer to the nearest dollar if necessary. (Hint: if it is other comprehensive loss, please use a negative sign for your answer
b.Determine the amount for “Revaluation Surplus” to be reported on the
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