XYZ Company purchased a land for $ 1,000,000 during 2017 and chooses the revaluation model in accounting for its land.
Below are the following information:
|
Date |
Fair Value |
|
December 31, 2017 |
$ 1,120,000 |
|
December 31, 2018 |
$ 870,000 |
|
December 31, 2019 |
$ 1,110,000 |
A ) What is the amount of unrealized gain on revaluation - land for the year 2018? ____
B ) How much is the accumulated other comprehensive income for the year 2018 to be recognized in the balance sheet? ____
| Answer a) | ||||||
| Year 2017 | ||||||
| 2017 purchase price | 1,000,000 | |||||
| December 2017 fair value | 1,120,000 | |||||
| revaluation gain in 2017 | 120,000 | |||||
| Year 2018 | ||||||
| Book value = | 1,120,000 | |||||
| December 2018 fair value | 870,000 | |||||
| Loss on revaluation = | -250,000 | |||||
| Hence, amount of unrealized loss = | -250,000 | |||||
| Answer b) | accumulated other comprehensive income for the year 2018 | |||||
| Gain in 2017 | 120,000 | |||||
| Loss in 2018 | -250,000 | |||||
| Accumulated amount | -130,000 | |||||
| Hence, answer = | -130,000 | |||||
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