Exercise 2: Fair value (Revaluation) Accounting for Depreciable Assets

On January 1^st, 2019 Nokia Corporation purchases equipment for $ 1,200,00. The equipment has a useful life of 5 years, is depreciated using the straight-line method of deprecation, and its residual value is zero. Nokia uses Fair value option (Accounting Revaluation) for its PPE.

Requirements: Prepare all journal entries based on the following assumptions:

1.On December 31^st, 2019, Nokia Corporation received an independent appraisal indicating that the fair value of this equipment is $1,100,000.

2.On December 31^st, 2019, Nokia Corporation received an independent appraisal indicating that the fair value of this equipment is $630,000.

3.On December 31^st, 2019, Nokia Corporation received an independent appraisal indicating that the fair value of this equipment is $500,000.

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