Required information [The following information applies to the questions displayed below.] Dower Corporation prepares its financial...

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.

Straight-Line Depreciation
	Choose Numerator:	/	Choose Denominator:	=	Annual Depreciation
		/		=	Annual depreciation
		/		=
Year	Annual Depreciation	x	Fraction of Year	=	Depreciation Expense
2021		x		=

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.)

	Before Revaluation	Conversion Factor	After Revaluation
Equipment
Accumulated depreciation
Book value

2-b. Prepare the journal entry to record the revaluation of the equipment.

Record the revaluation of the equipment.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
1

3.Calculate depreciation for 2022.

Calculate depreciation for 2022. (Round your denominator answer to 2 decimal places.)

Straight-Line Depreciation
Choose Numerator:	/	Choose Denominator:	=	Annual Depreciation Expense
	/		=	Depreciation Expense
	/		=

Solutions

Expert Solution

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

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.

ekkarill92 answered 1 year ago

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