Simple Value Limited (SVL) was incorporated on January 1, 2011 when the sole shareholder invested $1,000,000. This is the only financing the firm needed. SVL has a single project that it developed over four years. Below are details of the four years of operations. SVL used $900,000 of the funds to purchase land. At the end of 2014 the land was sold for its fair value.

Required:
Complete the following tables. The first table assumes that SVL uses the historical cost basis of measurement. The second table assumes that SVL uses the revaluation model of measurement. What do you observe about the total income for the four years? What do you observe about the balance sheet at the end of 2014?

*OCI = other comprehensive income

Transcribed Image Text:

(S000's) Revenue (all cash) Expenses (all cash) Fair value of land at end of the year 2011 S2,500 2,300 900 2014 $2,000 S1,500 1,700 1400 1,200 1,100 2013 2012 $3,000 2,600 1,000 Hiswical cus basis (S000's) Revenue Expenses Gain on disposal of land Net income 2013 $2,500 S3,000 2,000 1,500 S9,000 (2,300) (2,600) (1,700 (1,400) (8,000) 2011 2012 2014 4-yeatuul comprehensive income) Opening retained earnings Closing retained earnings Cash Land Total assets Share capital Retained earnings Total shareholder's equity 300 S 700 S1,000 $2,200 900 $1.200 $1,000 Revaluation model ($000's) Revenue Expenses Gain on disposal of land Net income OCI for revaluation gain (loss) Comprehensive income Cash Land Total assets Share capital Aceumulated revaluation surplus Retained earnings Total shareholder's equity 4-year total 2011 2,500 3,000 S2,000 S1,500 $9,000 (2,300) 2,600) (,700 (1,400) (8,000) 2012 2013 2014 S 300 S 700 $1,000 $2,200 900 $1,200 $1,000