In: Accounting
Required information
[The following information applies to the questions
displayed below.]
Dower Corporation prepares its financial statements according to
IFRS. On March 31, 2021, the company purchased equipment for
$216,000. The equipment is expected to have a six-year useful life
with no residual value. Dower uses the straight-line depreciation
method for all equipment. On December 31, 2021, the end of the
company’s fiscal year, Dower chooses to revalue the equipment to
its fair value of $234,000.
Required:
1.Calculate depreciation for 2021.
Calculate depreciation for 2021.
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2-a. Calculate the revaluation of the
equipment.
Calculate the revaluation of the equipment. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
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2-b. Prepare the journal entry to record the revaluation of the equipment.
Note: Enter debits before credits.
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3.Calculate depreciation for 2022.
Calculate depreciation for 2022. (Round your denominator answer to 2 decimal places.)
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1.
Straight-Line Depreciation
Choose Numerator: / Choose
Denominator: = Annual Depreciation
Cost - Salvage value /
Estimated useful life = Annual
Depreciation
216000 / 6
= 36000
Year Annual Depreciation x
Fraction of Year = Depreciation
Expense
2021 36000 x 0.75
= 27000
2-a.
Before Revaluation Conversion
Factor After Revaluation
Equipment 216000 1.083333333
234000
Accumulated depreciation 27000
1.083333333 29250
Book value 189000
204750
Conversion factor = $234000/$216000 = 1.08333
2-b.
Event General Journal Debit
Credit
1 Equipment ($234000 - $216000)
18000
Accumulated depreciation ($29250 - $27000)
2250
Revaluation surplus-OCI
15750
3.
Straight-Line Depreciation
Choose Numerator: / Choose
Denominator: = Annual Depreciation
Revalued cost / Remaining
estimated useful life = Annual
Depreciation
204750 / 5
= 40950
Kindly select appropriately from the drop-downs since the same have not been provided with the question.