Question - A partial statement of financial position of Bluewater Ltd. on December 31, 2016, showed the following property, plant, and equipment assets accounted for under the cost model (accumulated depreciation includes depreciation for 2013):
Buildings $350,000
Less: accumulated depreciation 100,000 $200,000
Equipment $120,000
Less: accumulated depreciation 40,000 $80,000
Bluewater uses straight-line depreciation for its building (remaining useful life of 20 years, no residual value) and for its equipment (remaining useful life of 8 years, no residual value). Bluewater applies IFRS and has decided to adopt the revaluation model for its building and equipment, effective December 31, 2016. On this date, an independent appraiser assessed the fair value of the building to be $275,000 and that of the equipment to be $90,000.
Instructions -
(a) Prepare the necessary general journal entry(ies), if any, to revalue the building and the equipment as at December 31, 2016, using the asset adjustment method.
(b) Prepare the entries to record depreciation expense for the year ended December 31, 2017.
(c) Repeat parts (a) and (b) using the proportionate method to revalue the building and the equipment.