Question

AX Development Ltd purchased a building for $560 000 on 1 April 2018; this building has an estimated useful life of 8 years. AX Development uses the straight-line method for depreciation.

On 31 December 2018, AX Development Ltd switched to the revaluation model for buildings. The fair value of the buildings on 31 December 2018 is assessed to be $600 000.

On 31 March 2020, a second revaluation was performed on buildings; this resulted in a revaluation loss of $100 000.

You are provided with the journal entries prepared at 31 December 2018, 31 March 2019 and 31 March 2020 related to the building above.

		$ Dr	$ Cr
31/12/18	Depreciation expense	52 500
	AD		52 500
	AD	52 500
	Building		52 500
	Building	92 500
	Revaluation gain		92 500
31/03/19	Depreciation expense	20 690
	AD		20 690
31/03/20	Depreciation expense	82 759
	AD		82 759
	AD	103 449
	Building		103 449
	Revaluation loss	100 000
	Building		100 000

Prepare financial statements for AX Development Ltd, relating to the building above, for the year ended 31 March 2019 and 2020.                                                                                                                       

Answer 1

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