UPFIRST, a hypothetical manufacturing company, has elected to use the revaluation model for its machinery. Assume for
Question:
UPFIRST, a hypothetical manufacturing company, has elected to use the revaluation model for its machinery. Assume for simplicity that the company owns a single machine, which it purchased for €10,000 on the first day of its fiscal period, and that the measurement date occurs simultaneously with the company’s fiscal period end.
1. At the end of the first fiscal period after acquisition, assume the fair value of the machine is determined to be €11,000. How will the company’s financial statements reflect the asset?
2. At the end of the second fiscal period after acquisition, assume the fair value of the machine is determined to be €7,500. How will the company’s financial statements reflect the asset?
Step by Step Answer:
International Financial Statement Analysis CFA Institute Investment Series
ISBN: 9780470287668
1st Edition
Authors: Thomas R. Robinson, Hennie Van Greuning CFA, Elaine Henry, Michael A. Broihahn, Sir David Tweedie