Question

A partial statement of financial position of Carla Vista Ltd. on December 31, 2016, showed the following property, plant, and equipment assets accounted for under the cost model (accumulated depreciation includes depreciation for 2016): Buildings $300,000 Less: accumulated depreciation 100,000 $200,000 Equipment $131,000 Less: accumulated depreciation 51,000 80,000 Carla Vista uses straight-line depreciation for its building (remaining useful life of 20 years, no residual value) and for its equipment (remaining useful life of 8 years, no residual value). Carla Vista applies IFRS and has decided to adopt the revaluation model for its building and equipment, effective December 31, 2016. On this date, an independent appraiser assessed the fair value of the building to be $148,000 and that of the equipment to be $102,000.

(a) Prepare the necessary general journal entries, if any, to revalue the building and the equipment as at December 31, 2016, using the asset adjustment method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2016 (To adjust depreciation on building.) Dec. 31, 2016 (To adjust Building.) Dec. 31, 2016 (To adjust depreciation on Equipment.) Dec. 31, 2016 (To adjust Equipment.)

Answer 1

a) preparing  the necessary general journal entries, if any, to revalue the building and the equipment as at December 31, 2016, using the asset adjustment method.

Calculation for Revaluation of Building
	$$
Carrying Value of Carla Vista Ltd building December 31, 2016,	$200,000
Less: an independent appraiser assessed the fair value of the building	$148,000
Loss from Revaluation Carrying Value of Carla Vista Ltd building December 31, 2016, -  Fair Value of Building 200000- 148000	$52,000
Calculation for Revaluation of Equipment
	$$
Less: accumulated depreciation	$80,000
Less: equipment to be fair value	$102,000
Gain from Revaluation equipment to be fair value - accumulated depreciation 102000- 80000	$22,000

Here are the necessary journal entries

Date	Account Titles and Explanation	Debit	Credit
Dec.31, 2016	Accumulated Depreciation - Building	$100,000
	Building		$100,000
	To adjust depreciation on building
Dec.31, 2016	Revaluation Loss (Refer Working above)	$52,000
	Building		$52,000
	(To adjust Building)
Dec.31, 2016	Accumulated Depreciation - Equipment	$51,000
	Equipment		$51,000
	(To adjust depreciation on Equipment)
Dec.31, 2016	Equipment	$22,000
	Revaluation Gain (refer working above)		$22,000
	(To adjust Equipment.)

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