Question

In: Accounting

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 $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.

  • Req 1
  • Req 2A
  • Req 2B
  • Req 3

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
  • Req 3
  • Calculate depreciation for 2022. (Round your denominator answer to 2 decimal places.)

    Straight-Line Depreciation
    Choose Numerator: / Choose Denominator: = Annual Depreciation Expense
    Formula Cost minus residual / Estimated Useful Life (years) = Depreciation Expense
    Amounts / = 0
  • Req 4A
  • Req 4B
  • 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.)

    Before Revaluation Conversion Factor After Revaluation
    Equipment 195000/210000
    Accumulated depreciation 195000/210000
    Book value

    195000/210000

  • Req 4B
  • 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

  • Record the revaluation of the equipment.
  • Note: Enter debits before credits.

    Event General Journal Debit Credit
    1

Solutions

Expert Solution

** 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

Related Solutions

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...
Required information [The following information applies to the questions displayed below.] The following financial statements and...
Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 93,700 $ 67,000 Accounts receivable, net 99,500 74,000 Inventory 86,800 121,000 Prepaid expenses 6,700 10,000 Total current assets 286,700 272,000 Equipment 147,000 138,000 Accum. depreciation—Equipment (38,500 ) (20,500 ) Total assets $ 395,200 $ 389,500 Liabilities and Equity Accounts payable $ 48,000 $ 64,500 Wages...
Required information [The following information applies to the questions displayed below.] The following financial statements and...
Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 105,100 $ 48,000 Accounts receivable, net 71,000 55,000 Inventory 67,800 92,500 Prepaid expenses 4,800 6,200 Total current assets 248,700 201,700 Equipment 128,000 119,000 Accum. depreciation—Equipment (29,000 ) (11,000 ) Total assets $ 347,700 $ 309,700 Liabilities and Equity Accounts payable $ 29,000 $ 36,000 Wages...
Required information [The following information applies to the questions displayed below.] The following financial statements and...
Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 105,100 $ 48,000 Accounts receivable, net 71,000 55,000 Inventory 67,800 92,500 Prepaid expenses 4,800 6,200 Total current assets 248,700 201,700 Equipment 128,000 119,000 Accum. depreciation—Equipment (29,000 ) (11,000 ) Total assets $ 347,700 $ 309,700 Liabilities and Equity Accounts payable $ 29,000 $ 36,000 Wages...
Required information [The following information applies to the questions displayed below.] The following financial statements and...
Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 96,100 $ 63,000 Accounts receivable, net 93,500 70,000 Inventory 82,800 115,000 Prepaid expenses 6,300 9,200 Total current assets 278,700 257,200 Equipment 143,000 134,000 Accum. depreciation—Equipment (36,500 ) (18,500 ) Total assets $ 385,200 $ 372,700 Liabilities and Equity Accounts payable $ 44,000 $ 58,500 Wages...
Required information [The following information applies to the questions displayed below.] The following financial statements and...
Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 87,500 $ 44,000 Accounts receivable, net 65,000 51,000 Inventory 63,800 86,500 Prepaid expenses 4,400 5,400 Total current assets 220,700 186,900 Equipment 124,000 115,000 Accum. depreciation—Equipment (27,000 ) (9,000 ) Total assets $ 317,700 $ 292,900 Liabilities and Equity Accounts payable $ 25,000 $ 30,000 Wages...
Required information [The following information applies to the questions displayed below.] The following financial statements and...
Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 2018 Assets Cash $ 96,700 $ 62,000 Accounts receivable, net 92,000 69,000 Inventory 81,800 113,500 Prepaid expenses 6,200 9,000 Total current assets 276,700 253,500 Equipment 142,000 133,000 Accum. depreciation—Equipment (36,000 ) (18,000 ) Total assets $ 382,700 $ 368,500 Liabilities and Equity Accounts payable $ 43,000 $ 57,000 Wages...
Required information [The following information applies to the questions displayed below.] The following financial statements and...
Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 92,500 $ 69,000 Accounts receivable, net 102,500 76,000 Inventory 88,800 124,000 Prepaid expenses 6,900 10,400 Total current assets 290,700 279,400 Equipment 149,000 140,000 Accum. depreciation—Equipment (39,500 ) (21,500 ) Total assets $ 400,200 $ 397,900 Liabilities and Equity Accounts payable $ 50,000 $ 67,500 Wages...
Required information [The following information applies to the questions displayed below.] Following is financial information describing...
Required information [The following information applies to the questions displayed below.] Following is financial information describing the six operating segments that make up Fairfield, Inc. (in thousands): Segments Red Blue Green Pink Black White Sales to outside parties $ 1,820 $ 821 $ 523 $ 318 $ 130 $ 108 Intersegment revenues 25 100 118 0 25 311 Salary expense 623 388 411 321 326 71 Rent expense 148 175 90 101 51 40 Interest expense 74 68 91 58...
Required information [The following information applies to the questions displayed below.] Sombrero Corporation, a U.S. corporation,...
Required information [The following information applies to the questions displayed below.] Sombrero Corporation, a U.S. corporation, operates through a branch in Espania. Management projects that the company’s pretax income in the next taxable year will be $117,200: $90,800 from U.S. operations and $26,400 from the Espania branch. Espania taxes corporate income at a rate of 30 percent. b. Management plans to establish a second branch in Italia. Italia taxes corporate income at a rate of 10 percent. What amount of...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT