On January 1, 2014, ABC Company acquires a building at a cost of $125,000. The building is expected to have a 25-year life and no residual value. The asset is accounted for under the revaluation model, using the asset adjustment method. Revaluations are carried out every three years. On December 31, 2016, the fair value of the building is appraised at $120,000, and on December 31, 2019, its fair value is $90,000. ABC Company applies IFRS.
Instructions
(Round to the nearest dollar in all calculations.)
(a) Prepare the journal entry(ies) required on December 31, 2014.
(b) Prepare the journal entry(ies) required on December 31, 2015.
(c) Prepare the journal entry(ies) required on December 31, 2016.
(d) Prepare the journal entry(ies) required on December 31, 2017.
(e) Prepare the journal entry(ies) required on December 31, 2019.
*(f) Prepare the journal entry required on December 31 , 2016, and the journal entry required on December 31, 2019, to revalue the building, if ABC uses the proportionate method.
(g) From the perspective of an investor in ABC, discuss the financial statement effects of using the revaluation model to determine the carrying amount of ABC's buildiog.