Flounder Corporation is a public company that manufactures farm implements, such as tractors, combines, and wagons. Flounder uses the revaluation model per IAS 16, and records asset revaluations using the elimination method. (This means the balance in the accumulated depreciation account is eliminated against the asset account just prior to revaluation of the asset to fair value.) A piece of manufacturing equipment included in the property, plant, and equipment section on Flounder's statement of financial position was purchased on December 31, 2019, for a cost of $92,000. The equipment was expected to have a remaining useful life of 5 years, with benefits being received evenly over the 5 years. Residual value of the equipment was estimated to be $9.000. Consider the following two situations: Situation 1: At December 31, 2020, no formal revaluation is performed, as management determines that the carrying amount of the property, plant, and equipment is not materially different from its fair value. Situation 2: At December 31, 2020, a formal revaluation is performed and the independent appraisers assess the equipment's fair value to be $82.000. During the revaluation process, it is determined that the remaining useful life of the equipment is four years, with a residual value of $10.000. At December 31, 2021, no formal revaluation is performed, as management determines that the carrying amount of the property plant, and equipment is not materially different from its fair value. The equipment is sold on March 31, 2022 for $57,000. (a) Prepare any journal entries required under situation 1 described above for: (1) the fiscal year ended December 31, 2020; (2) the fiscal year ended December 31, 2021; and (3) the disposal of the equipment on March 31, 2022. (Credit account tities are qutomatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) No. Date Account Titles and Explanation Debit Credit (1) December 31, 2020 Prepare any journal entries required under situation 1 described above for: (1) the fiscal year ended December 31, 2020; (2) the fiscal year ended December 31, 2021; and (3) the disposal of the equipment on March 31, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter O for the amounts.) No. Date Account Titles and Explanation Debit Credit (1) December 31, 2020 (2) December 31, 2021 (3) March 31, 2022 (To record depreciation on equipment) (3) March 31, 2022 (To record disposal of equipment)
