CASTLE Corp. (CC) purchases a building in early January 2017 and the cost of the basic structure of $180,000 is classified in an account called Buildings. CC accounts for this class of asset using the revaluation model ( Proportinate Method) , revalues the class every three years, and uses straight-line depreciation. The building structure is expected to have a useful life of 20 years with no residual value. CC has a December 31 fiscal year end. The asset's fair value at December 31, 2019, is $160,000.

CASTLE Corp. (CC) continues to own the building that it purchased in early January 2017 and continues to account for this class of asset using the revaluation model (revaluing the class every three years, and using straight-line depreciation over 20 years). The building structure is expected to have a useful life of 20 years with no residual value. The asset's fair value at December 31, 2022, is $124,000.

Instructions

a. Calculate CC's depreciation for the first three years and the revaluation entries needed at December 31, 2019, assuming the balance in the Accumulated Depreciation account is eliminated. CC uses revaluation proportionate method of revaluation.

b. Calculate a new depreciation rate for 2020 to 2022 to take into account the change in the asset's carrying amount. Show the related journal entries.

c. Apply the revaluation model on December 31, 2022 and show all the calculations and related journal entries.