Bravo Company has a piece of equipment with original cost of $1,000,000. The equipment’s carrying value at the beginning of the year (net of any accumulated depreciation) was $700,000. Bravo recorded $100,000 for depreciation during the year. The equipment’s fair value at the end of the year was $480,000. This is the first year that the company has revalued this equipment.
Required:
a. Record the journal entry for the revaluation adjustment assuming that elimination method.
b. Record the journal entry for the revaluation adjustment assuming that proportional method.