PPE Revaluation:

ABC Co. is a manufacturer of escalators and elevators. The following provides information on two types of property, plant, and equipment as at the end of fiscal year 2014:

	Assembly-line equipment	Factory building
Cost	$8,000,000	$20,000,000
Estimated residual value	Nil	$2,000,000
Estimated useful life on purchase date	10 years	40 years
Remaining useful life at the end of fiscal 2014	6 years	25 years
Depreciation policy	Straight-line	Straight-line
Accumulated depreciation at the end of 2014	$3,200,000	$6,750,000

Required:

At the beginning of fiscal year 2015, ABC conducted appraisals of these assets. The appraisals indicate that the factory building is worth $18 million while the equipment is worth $4,320,000. While the company has conducted regular appraisals in the past, these are the first appraisals to show significant deviations of fair value from carrying value. In other words, there have been no revaluation surpluses or losses on these assets prior to 2015. For the revaluation on the equipment, the company has chosen to use the proportional method. For the building, the company will use the elimination method. Record the journal entries to revalue these two assets at the beginning of 2015.

Using the amounts after revaluation, compute the depreciation that would be recorded on each of the two assets for 2015.

At the beginning of fiscal year 2016, ABC conducted another appraisal, which showed a value of $16 million for the building and $3,800,000 for the equipment. For consistency of accounting policies, the company must use the same revaluation policies as in 2015 (see part a above). Record the journal entries to revalue these two assets at the beginning of 2016.