Question
At 30 June 2021, Harry Ltd holds a block of land. The land has a carrying amount of $1.5 million. An independent market appraisal has
At 30 June 2021, Harry Ltd holds a block of land. The land has a carrying amount of $1.5 million. An independent market appraisal has valued the land at $1.4 million but costs to dispose of the land are estimated at $100 000. The value in use of land is determined to be $1.45 million.
Required
- Assume that this block of land was carried under the cost model. Prepare the appropriate journal entry to record any impairment loss that should be recognised.
Impairment loss Land Dr
Accumulated impairment losses Land Cr ?
- Suppose now that this same block of land was carried under the revaluation model.
Prepare the journal entry to record any necessary adjustment assuming there had been a prior revaluation increase of $30 000.
Loss on revaluation Land (OCI) Dr
Loss on revaluation Land (P&L) Dr
Land Cr ?
Asset revaluation surplus Land Dr
Loss on revaluation Land (OCI) Cr
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