Alpha Company has a piece of equipment with original cost of $1,000,000. The equipment’s carrying value at the beginning of the year (net of any accumulated depreciation) was $700,000. Alpha recorded $100,000 for depreciation during the year. The equipment’s fair value at the end of the year was $900,000. This is the first year that the company has revalued this equipment.
Required:
a. Record the journal entry for the revaluation adjustment assuming that Alpha uses the elimination method.
b. Record the journal entry for the revaluation adjustment assuming that Alpha uses the proportional method.