On January 1, 2017, Algo Ltd. acquires a building at a cost of $230,000. The building is expected to have a 20-year life and no residual value. The asset is accounted for under the revaluation model, using the asset adjustment method. Revaluations are carried out every three years. On December 31, 2019, the fair value of the building is appraised at $205,000, and on December 31, 2022, its fair value is $150,000. Algo Ltd. Applies IFRS.

Instructions

(Round to the nearest dollar in all calculations.)

(a) Prepare the journal entry(ies) required on December 31, 2017.

(b) Prepare the journal entry(ies) required on December 31, 2018.

(c) Prepare the journal entry(ies) required on December 31, 2019.

(d) Prepare the journal entry(ies) required on December 31, 2020.

(e) Prepare the journal entry(ies) required on December 31, 2021.

(f) Prepare the journal entry(ies) required on December 31, 2022.

*(g) Prepare the journal entry required on December 31, 2019, and the journal entry required on December 31, 2022, to revalue the building, if Algo uses the proportionate method.

*(h) Prepare a continuity schedule showing the amounts recorded to the Buildings account and to the Accumulated Depreciation account, as well as indicating the carrying amount for each fiscal year from date of purchase to December 31, 2022, using

(1) The asset adjustment method and

(2) The proportionate method. Show the carrying amount under each method at the end of each fiscal year.

(i) From the perspective of an investor in Algo, discuss the financial statement effects of using the revaluation model to determine the carrying amount of Algo's building.