Question

Cameo Manufacturers Inc., a publicly listed company, has two machines that are accounted for under the revaluation model. Technology in Cameo's industry is fast-changing, causing the fair value of each machine to change significantly approximately every two years. The following information is available:
Both machines were last revalued on December 31, 2012. Cameo has a December 31 year end.
Instructions
(a) Prepare the journal entries required for 2014, using the asset adjusonent method.
(b) Prepare the journal entries required for 2014, using the proportionate method.
(c) Comment on the effects on the 2014 statement of comprehensive income with respect to parts (a) and (b).
(d) Comment on the effects on the December 31,2014 statement of financial position with respect to parts (a) and (b).
(e) Would a potential investor prefer Cameo to use the asset adjustment method or the proportionate method to apply the revaluation model?


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  • CreatedSeptember 18, 2015
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