Assume the following. Perth Company purchased a parcel of land on January 1, 2006, for ($ 600,000).
Question:
Assume the following. Perth Company purchased a parcel of land on January 1, 2006, for \(\$ 600,000\). It constructed a building on the land at a cost of \(\$ 3,000,000\). The building was occupied on January 1, 2009, and is expected to have a useful life of 40 years and an estimated salvage value of \(\$ 1,000,000\).
As of December 31, 2010, and 2011, 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 2012 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 value of the building was not reevaluated by the company in 2012.
Required
a. Under U.S. accounting rules, what amount would be reported on the company's 2011 and 2012 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 2012 for the building? Show any necessary computations.
c. Under the IFRS revaluation model, what amount would be reported on the company's 2011 and 2012 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 2012 for the building? Show any necessary computations.
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a Under US accounting rules For 2011 The land would be reported at its historical cost as there has been no significant change in the real estate mark...View the full answer
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