Question
In: Accounting
Jarvis Corporation owned a building with a book value of $109,000 at 12/31/24. The building had...
Jarvis Corporation owned a building with a book value of $109,000 at 12/31/24. The building had a 15-year remaining life and a Revaluation Surplus balance of $46,000 on that date. The company sold the building on 1/1/25 for $182,000. What is the combined effect of the sale and Revaluation Surplus adjustment on Total Assets per IFRS?
Select one:
a. $109,000
b. $182,000
c. $27,000
d. $46,000
e. $73,000
Solutions
Expert Solution
| In case of IFRS, when an asset is disposed its relevant balance in revaluation reserve is transferred to retained earnings. Further any sale proceeds above its book value will be recognised as profit on sale of asset and shown in profit and loss account. | ||||||
| So, here entries on sale of asset would be: | ||||||
| Date | Particulars | Debit | Credit | |||
| 1 | 1/1/2025 | Cash | $182,000.00 | |||
| Fixed asset | $109,000.00 | |||||
| Profit on sale of asset | $73,000.00 | (182000-109000) | ||||
| ( to book sale of asset) | ||||||
| 2 | 1/1/2025 | Revaluation Surplus Account | $46,000.00 | |||
| Retained earnings | $46,000.00 | |||||
| ( to transfer the balance of revaluation surplus to retained earnings) | ||||||
| So, here the net impact of sale and revaluation surplus adjustment on total asset if of $109000 ( the book value of asset) | ||||||
| Correct option | a.) 109000 |
Leave a comment in case of any query.
ekkarill92 answered 2 years agoRelated Solutions
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