The Transnational Business Inc. (TBI) purchased an asset that cost $60,000 on January 1, Year 1. The

Question:

The Transnational Business Inc. (TBI) purchased an asset that cost $60,000 on January 1, Year 1. The asset had a four-year useful life and a $10,000 salvage value.

Required
a. Determine the amount of expense recognized on the Year 1 income statement, assuming TBI uses U.S. GAAP.
b. Determine the amount of expense or gain recognized on the income statement, assuming TBI uses the IFRS revaluation model and the asset is determined to have a fair value of $55,000 as of December 31, Year 1.
c. Determine the amount of expense or gain recognized on the income statement, assuming TBI uses the IFRS revaluation model and the asset is determined to have a fair value of $65,000 as of December 31, Year 1.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...

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