Question
ABC Company uses IFRS for financial reporting and revalues its buildings in accordance with IFRS. On January 1, 2009, ABC Company paid cash of $4,400,000
ABC Company uses IFRS for financial reporting and revalues its buildings in accordance with IFRS.
On January 1, 2009, ABC Company paid cash of $4,400,000 to acquire its only building.
The company uses straight line depreciation and the building has a 20-year life and no salvage value.
On December 31, 2010, the company revalued the building when the fair value of the building was $4,158,000
On December 31, 2012, the company sold the building for $3,970,000
The company's accounting policy is to reverse a portion of revaluation surplus related to any increased depreciation expense.
The entry to record the sale of the building on December 31, 2012 is:
a.Cash3,970,000
Accumulated Depreciation - Building462,000
Revaluation Surplus176,000
Building4,158,000
Gain on Sale of Building450,000
b.Cash3,970,000
Accumulated Depreciation - Building462,000
Revaluation Surplus176,000
Building4,158,000
Gain on Sale of Building274,000
Retained Earnings176,000
c.Cash3,970,000
Building3,970,000
d.Cash3,970,000
Gain on Sale of Building3,970,000
e.None of these is correct
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Fundamentals Of Advanced Accounting
Authors: Joe Hoyle
4th Edition
78136636, 978-0078136634
