Aden Motels Inc. owns a motel that it had purchased on January 1, 2020 for $1.5 Million cash and is accounted for in a separate account, classified as "Structures." The company is using the revaluation model to account for its structures and revalues them every three years. Aden uses straight-line depreciation over the asset's 15-year useful life with no residual value.

The asset's fair values were as follows:

Dec 31, 2022:$1,450,000.

Instructions

a.Assuming Aden uses the asset adjustment (elimination) method for revaluation, prepare all required journal entries for 2020, 2021, 2022 and 2023.

b.Assume instead that the value of the structurewas $1,000,000 at the end of 2022 and there is a credit balance of 150,000 in the revaluation surplus account,record the journal entry for the revaluation and the 2023 depreciation.What happens if the structure increases in value at the next revaluationdate?