Chan Corporation adopts revaluation accounting for its equipment that is used in operation of the business....

Chan Corporation adopts revaluation accounting for its equipment that is used in operation of the business. The equipment was purchased on January 1, 2019 for $620,000. It has 5-year useful life with $20,000 residual value. The company has the following information related to the equipment. Assume that the estimated useful life and residual value do not change during the periods and the company uses straight-line method of depreciation. Round all answers to the nearest dollar. Date Fair Value January 3, 2019 $620,000 December 31, 2019 440,000 December 31, 2020 400,000 December 31, 2021 240,000 Based on IFRS, Chan Corporation transfers from AOCI to Retained Earnings or from Retained Earnings to AOCI the difference between depreciation based on the revalued carrying amount of the equipment and depreciation based on the asset’s original cost. Instructions: Prepare the journal entries for Chan Corporation for the following transactions.(round your answer to the nearest dollars) a. Purchase of equipment on 1-1-2019. b. Adjusting entries related to the equipment on 12-31-2019. c. Adjusting entries related to the equipment on 12-31-2020. d. Adjusting entries related to the equipment on 12-31-2021

Expert Solution

Table 2

Table 3 : Journal Entries

a) Purchase of Equipment

Asset (Equipment) A/c Dr 6,20,000

To Bank Account A/c Cr 6,20,000

b) Adjusting Entry 2020

Date		Accounts	Ref.	Debit	Credit
2019
	A	Equipment		$ 6,20,000
		Bank			$ 6,20,000
		Purchased equipment with cash.

2019		AOCI A/c		$ 60,000
	B	To Asset A/c			$ 60,000

		Revaluvation Loss credited to AOCI Account

2020		To Asset A/c		$ 65,000
	C	AOCI A/c			$ 65,000

		Revaluvation Profit credited to AOCI Account

2021		AOCI A/c		$ 65,000
	D	To Asset A/c			$ 65,000
		Asset A/c
		Revaluvation Loss credited to AOCI Account

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