Garrett Corporation paid $200,000 to acquire land, buildings, and equipment. At the time of acquisition, Garrett paid $20,000 for an appraisal, which revealed the following values: land, $100,000; buildings, $125,000; and equipment, $25,000.

Required:

1.

What cost should the company assign to the land, buildings, and equipment, respectively?

2.

Assume that Garrett uses IFRS and chooses to use the revaluation model to value its property, plant, and equipment. At the end of the year, the book value of the land, buildings, and equipment are $88,000, $104,000, and $18,000, respectively. The company determines that the fair value of the land, buildings, and equipment at the end of year is $110,000, $106,000, and $15,000, respectively. Prepare the journal entries that Garrett should make to value its property, plant, and equipment.

EQUITY

311 Common Stock

331 Retained Earnings

395 Revaluation Surplus

 

Chart of Accounts ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 141 Inventory EXPENSES 152 Prepaid Insurance 500 Cost of Goods Sold 171 Land 511 Insurance Expense 181 Building 512 Utilities Expense 185 Equipment 521 Salaries Expense 198 Accumulated Depreciation 532 Bad Debt Expense 540 Interest Expense LIABILITIES 541 Depreciation Expense 211 Accounts Payable 559 Miscellaneous Expenses 231 Salaries Payable 891 Loss on Impairment 250 Unearned Revenue 910 Income Tax Expense 261 Income Taxes Payable