Assume the following. Pescara Company purchased a parcel of land on January 1, 2012, for $600,000. It constructed a building on the land at a cost of $3,000,000. The building was occupied on January 1, 2015, and is expected to have a useful life of 40 years and an estimated salvage value of $1,000,000.

As of December 31, 2016, and 2017, the fair value of the land had not been formally revalued because the real estate market had not changed significantly. Due to a jump in real estate prices, during 2018 the value of the land had increased to $650,000, and the fair value of the building was $3,000,000. The salvage value of the building is still estimated at $1,000,000.

The land and the building were reevaluated by the company in 2018.

Required

a. Under U.S. accounting rules, what amount would be reported on the company’s 2017 and 2018 balance sheets for the land and for the building? Show any necessary computations.

b. Under U.S. accounting rules, what amount of depreciation expense would be reported in 018 for the building? Show any necessary computations.

c. Under the IFRS revaluation model, what amount would be reported on the company’s 2017 and 2018 balance sheets for the land and for the building? Show any necessary computations.

d. Under the IFRS revaluation model, what amount of depreciation expense would be reported in 2018 for the building? Show any necessary computations.