Question
AX Development Ltd purchased a building for $560 000 on 1 April 2018; this building has an estimated useful life of 8 years. AX Development
AX Development Ltd purchased a building for $560 000 on 1 April 2018; this building has an estimated useful life of 8 years. AX Development uses the straight-line method for depreciation.
On 31 December 2018, AX Development Ltd switched to the revaluation model for buildings. The fair value of the buildings on 31 December 2018 is assessed to be $600 000.
On 31 March 2020, a second revaluation was performed on buildings; this resulted in a revaluation loss of $100 000.
You are provided with the journal entries prepared at 31 December 2018, 31 March 2019 and 31 March 2020 related to the building above.
|
| $ Dr | $ Cr |
31/12/18 | Depreciation expense | 52 500 |
|
| AD |
| 52 500 |
|
|
|
|
| AD | 52 500 |
|
| Building |
| 52 500 |
|
|
|
|
| Building | 92 500 |
|
| Revaluation gain |
| 92 500 |
|
|
|
|
31/03/19 | Depreciation expense | 20 690 |
|
| AD |
| 20 690 |
|
|
|
|
31/03/20 | Depreciation expense | 82 759 |
|
| AD |
| 82 759 |
|
|
|
|
| AD | 103 449 |
|
| Building |
| 103 449 |
|
|
|
|
| Revaluation loss | 100 000 |
|
| Building |
| 100 000 |
Prepare financial statements for AX Development Ltd, relating to the building above, for the year ended 31 March 2019 and 2020.
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