Tsongas Company purchased a new headquarters building for $1,600,000 on January 3, Year 1 and elected to use the revaluation method. The building has a useful life of 4 years, no salvage value, and depreciation is calculated on the straight-line basis. At the end of Year 1, independent appraisers determine that the building had a fair value of $1,500,000 (no revisions to any other information). (Use extra space/sheet as needed) Answer each of the following questions under IFRS. Show your work for partial credit.

1. What is the journal entry to record depreciation for Year 1?

2. What is the journal entry to adjust the plant assets to fair value at the end of Year 1?

3. What is the journal entry to record depreciation for this building for Year 2?

4. Instead of using the building as its headquarters on January 3, Year 1, assume that Tsongas decides to use the building as a rental property. Ignoring $ amounts, briefly state how the journal entry to adjust the building to fair value at the end of Year 1 would differ from your response to question 2 above.

Answer rating: 100% (QA)

1 Journal Entry to Record Depreciation for Year 1 Date December 31 Year 1 Accounts Debit Credit Depr... View the full answer