Question

Maple Inc. owns equipment that it purchased on January 1, 2018 for $4 Million. The following...

Maple Inc. owns equipment that it purchased on January 1, 2018 for $4 Million.

The following additional information is available:

Depreciation: 10-year useful life, straight line basis, no residual.

Dec 31, 2018 – Book value (after recording 2018 depreciation): $3,600,000

Dec 31, 2018 – Fair value: $4,500,000  

Dec 31, 2019 – Fair value $3,000,000

The company uses the revaluation model (asset adjustment method) to account for its property, plant and equipment.

Instructions

Assuming the entry for the current year's depreciation has already been recorded, prepare the entr(ies) at:

  1. Dec 31, 2018
  2. Dec 31, 2019

Homework Answers

Answer #1
Date Account Titles & Explanation Debit $ Credit $
Dec.31,2018 Equipment        9,00,000
Revaluation Surplus    900,000
(4,500,000 - 3,600,000 )
( To revaluation surplus )
Dec.31,2019 Depreciation Expense        500,000
Equipment    500,000
( 4,500,000 / 9 )
( to depreciation Exepnse )
Dec.31,2019 Revaluation Expense-Income Statement      1,000,000
Equipment 1,000,000
( 4,500,000 - 500,000 ) - 3,000,000
( to revalue equipment at fair value )
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