Chapter 12, Problem 12.12E

Asset Revaluation, Downwards, IFRS. Lousa Company revalues its equipment with a carrying value of €1,100,000 to its fair value of €950,000. The original cost of the equipment is €1,500,000 and accumulated depreciation is €400,000.

Required

1. a. What is the revaluation surplus or unrealized loss?
2. b. Where does the firm report the revaluation surplus or unrealized loss in the financial statements?
3. c. Provide the journal entries to record the revaluation (assume that Lousa eliminates all prior accumulated depreciation and adjusts the historical cost to fair value).