On July 1, 2020, Concord Ltd., a publicly listed company, acquired assets from Riverbed Ltd. On the transaction date, a reliable, independent valuator assessed the fair values of these assets as follows: Manufacturing plant (building #1) Storage warehouse (building #2) Machinery (in building #1) Machinery (in building #2) $399,680 209,880 74,700 45,000 The buildings are owned by the company, and the land that the buildings are situated on is owned by the local municipality and is provided free of charge to the owner of the buildings to encourage local employment. In exchange for the acquisition of these assets, Concord issued 145,510 common shares. Concord's shares are thinly traded (that is, traded in relatively low volume leading to more volatile price changes than most public companies). In the most recent sale of Concord's shares on the Toronto Stock Exchange, 610 shares were sold for $5 per share. At the time of acquisition, both buildings were considered to have an expected remaining useful life of 10 years, the machinery in building #1 was expected to have a remaining useful life of 3 years, and the machinery in building #2 was expected to have a useful life of 9 years. Concord uses straight-line depreciation with no residual values. At December 31, 2020, Concord's fiscal year end, Concord recorded the correct depreciation amounts for the six months that the assets were in use. An independent appraisal concluded that the assets had the following fair values: Manufacturing plant (building #1) Storage warehouse (building #2) $387,600 178,600 At December 31, 2021, Concord once again retained an independent appraiser and determined that the fair value of the assets was: Manufacturing plant (building #1) Storage warehouse (building #2) $339,780 160,790 (a) Prepare the journal entries required for 2020 and 2021, assuming that the buildings are accounted for under the revaluation model (using the asset adjustment method), and that the machinery is accounted for under the cost model. (Credit account titles are automatically indented when the July 1, 2020 Dec. 31, 2020 (To record depreciation on Building #1) Dec. 31, 2020 (To record depreciation on Building #2) Dec. 31, 2020 (To record depreciation on Machinery in Building #1) Dec. 31, 2020 (To record depreciation on Machinery in Building #2) Dec. 31, 2020 (To revalue manufacturing plant -(Building #1)) Dec. 31, 2020 (To revalue storage warehouse - (Building #2)) Dec. 31, 2021 (To record depreciation on Building #1) Dec. 31, 2021 (To record depreciation on Building #2) Dec. 31, 2021 (To record depreciation on Machinery in Building #1) Dec. 31, 2021 (To record depreciation on Machinery in Building #2) Dec. 31, 2021 (To revalue manufacturing plant - (Building #1)) Dec. 31, 2021 (To revalue storage warehouse - (Building #2))
