L What amount will be shown as revaluation surplus (deficit) on 31 December 2020 in respect of this building? Round your answer to the nearest $. Answer ii. What amount will be credited or debited to profit or loss for the year ended 31st December 2020? State whether this amount is a profit or loss.
L What amount will be shown as revaluation surplus (deficit) on 31 December 2020 in respect of this building? Round your answer to the nearest $. Answer ii. What amount will be credited or debited to profit or loss for the year ended 31st December 2020? State whether this amount is a profit or loss.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 8P: At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the...
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Question
![(c) Pablo vacated an office building and let it out to a third party on 1 July 2020.
The building had an original cost of $1,200,000 on 1 January 2015 and was
being depreciated over 40 years using the double declining balance method
until 31st December 2016. The estimated residual value of the building is
$283,000. On 1 January 2017, the company decided to switch to straight-line
depreciation with no change in the estimated residual value of the building. The
building was judged to have a fair value on 1 July 2020 of $809,316. At the
year-end date of 31" December 2020, the fair value of the building was
estimated at $960,000.
ii.
Pablo uses the fair value model for investment property.
Required
What amount will be shown as revaluation surplus (deficit) on 31 December
2020 in respect of this building? Round your answer to the nearest $.
Answer
1.
What amount will be credited or debited to profit or loss for the year ended 31st
December 2020? State whether this amount is a profit or loss.
Answer
Page 3 of 9](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48bc8981-eb4d-4b1e-8442-da18a7578deb%2Fe06f0d80-95c4-4efc-a4e9-1c6a9cd92492%2F1ticeus_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(c) Pablo vacated an office building and let it out to a third party on 1 July 2020.
The building had an original cost of $1,200,000 on 1 January 2015 and was
being depreciated over 40 years using the double declining balance method
until 31st December 2016. The estimated residual value of the building is
$283,000. On 1 January 2017, the company decided to switch to straight-line
depreciation with no change in the estimated residual value of the building. The
building was judged to have a fair value on 1 July 2020 of $809,316. At the
year-end date of 31" December 2020, the fair value of the building was
estimated at $960,000.
ii.
Pablo uses the fair value model for investment property.
Required
What amount will be shown as revaluation surplus (deficit) on 31 December
2020 in respect of this building? Round your answer to the nearest $.
Answer
1.
What amount will be credited or debited to profit or loss for the year ended 31st
December 2020? State whether this amount is a profit or loss.
Answer
Page 3 of 9
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