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
$240,000. 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 $220,000.
Required:
1.Calculate depreciation for 2021.
2-a. Calculate the revaluation of the
equipment.
2-b. Prepare the journal entry to record the
revaluation of the equipment.
3.Calculate depreciation for 2022.
Prepare the journal entry to record the revaluation of the equipment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
No | Event | General Journal | Debit | Credit |
---|---|---|---|---|
1 | 1 | Equipment | ||
Accumulated depreciation |
Calculate depreciation for 2022. (Round your denominator answer to 2 decimal places.)
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Calculate the revaluation of the equipment assuming that the fair value of the equipment at the end of 2021 is $195,000. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
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Assume that the fair value of the equipment at the end of 2021 is $195,000. Prepare the journal entry to record the revaluation of the equipment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole number.)
Journal entry worksheet
Note: Enter debits before credits.
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** Please note - All figures are in "$"
(All Figures in $) | ||||
1 | Calculation for Depreciation for the year 2021 | |||
Cost of Equipment | 240000 | |||
Expected Life( In years) | 6 | |||
Annual Depreciation(Straight line method) | 40000 | |||
Equipment was purchased on 31st March 2021 | ||||
So Depreciation for the year 2021 will be accounted for 9 Months | ||||
40000*9/12 | 30000 | |||
2 a | Revaluation of the Equipment | |||
Before Revaluation | Adjustment | After revaluation | ||
Equipment | 240000 | -20000 | 220000 | |
Accumulated Depreciation | -30000 | 30000 | Nil | |
Book Value | 210000 | 10000 | 220000 | |
2 b | Journal Entry to record the revaluation of Equipment | |||
(in $) | ||||
Date | Particulars | Debit | Credit | |
31-12-2021 | Equipment A/c | 10000 | ||
Revaluation Reserve A/c | 10000 | |||
(Being Equipment revalued ) | ||||
3 | Calculation for Depreciation for the year 2022 | |||
Value of Equipment | 220000 | |||
Remaining Life of Equipment (In Years) | 5.25 | |||
Depreciation (using Straight Line Method) | ||||
220000/5.25 | 41906 | |||