Part B: [6 marks]

On January 1, 2016, Synthetic Group purchased equipment for $350,000. This equipment is expected to have a 7-year useful life with no residual value. Synthetic uses the straight-line depreciation method for all depreciable assets. Synthetic chooses to revalue the equipment (i.e., revaluation model) and use the elimination method for the accumulated depreciation at the end of every year. Synthetic has the following information related to the equipment:

Dec.31, 2016 Fair Value $324,000

Dec.31, 2017 Fair Value $240,000

Required:

1. (a) Prepare journal entries related to the equipment at the end of 2016.(Note: journal entry for

   purchase is not needed) [3 marks]

2. (b) Prepare journal entries related to the equipment at the end of 2017 [3 marks]