Analyze why they have used this way to answer the below question (The question is already answered I need analysis for the answer like a paragraph for each case)

Example: On 1/2/08, See-Saw Systems (S3) purchased a patent valued at 8 million; it had a useful life of 8 years with zero residual value, and S3 used straight-line depreciation. On 1/2/10, the fair value of the patent had decreased to 4.5 million. On 1/2/12, the fair value had increased to 6 million, and on 1/2/14, the fair value had dropped to 1 million. Assuming S3 uses the revaluation model, determine how the gains and losses are reported.

Straight-line amortization is 8 million 8 years = 1 million per year, so the book value on 1/2/10 is:

8 million 2(1 million) = 6 million

The revaluation to 4.5 million results in a 1.5 million loss, which appears on S3s income statement.

Straight-line amortization is now 4.5 million 6 years = 750,000 per year. On 1/2/12 the book value is:

4.5 million 2(750,000) = 3 million

The revaluation to 6 million results in a 3 million gain. Because S3 had a previous 1.5 million loss on its income statement, the first 1.5 million of the gain is shown on the income statement to reverse the loss; the remaining 1.5 million gain goes to the Revaluation Surplus account on S3s balance sheet.

Straight-line amortization is now 6 million 4 years = 1.5 million per year.

On 1/2/14 the book value is:

6 million 2(1.5 million) = 3 million

The revaluation to 1 million results in a 2 million loss. Because S3 had a previous 1.5 million gain in the Revaluation Surplus account in equity, the first 1.5 million of the loss reduces the Revaluation Surplus account to zero. The remaining 500,000 million loss is shown on S3s income statement.