Uplifting Co. is a manufacturer of escalators and elevators. The following provides information on two types of PPE as at the end of fiscal year 2020: 

Required:

a. Using the above information, compute the depreciation that would be recorded on each of the two assets for 2021. Do not use the information below.

b. At the beginning of fiscal year 2021, Uplifting conducted appraisals of these assets. The appraisals indicate that the factory building is worth $18 million while the equipment is worth $4,320,000. Although the company has conducted regular appraisals in the past, these are the first appraisals to show significant deviations of fair value from carrying value. In other words, there have been no revaluation surpluses or losses on these assets prior to 2021. For the revaluation on the equipment, the company has chosen to use the proportional method. For the building, the company will use the elimination method. Record the journal entries to revalue these two assets at the beginning of 2021.

c. Using the amounts after revaluation, compute the depreciation that would be recorded on each of the two assets for 2021.

d. At the beginning of fiscal year 2022, Uplifting conducted another appraisal, which showed a value of $16 million for the building and $3,800,000 for the equipment. For consistency of accounting policies, the company must use the same revaluation policies as in 2021 (see part b above). Record the journal entries to revalue these two assets at the beginning of 2022.

Transcribed Image Text:

Cost Estimated residual value Estimated useful life on purchase date Remaining useful life at the end of fiscal 2020 Depreciation policy Accumulated depreciation at end of 2020 Assembly-line equipment $8,000,000 nil 10 years 6 years Straight-line $3,200,000 Factory building $20,000,000 2,000,000 40 years 25 years Straight-line $6,750,000