Problem 10-10 (Part Level Submission) On July 1, 2020, Sarasota Ltd., a publicly listed company, acquired assets from Bridgeport 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) $399,620 209,920 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, Sarasota issued 145,790 common shares. Sarasota'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 Sarasota's shares on the Toronto Stock Exchange, 560 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. Sarasota uses straight-line depreciation with no residual values. At December 31, 2020, Sarasota's fiscal year end, Sarasota 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) $385,700 178,600 At December 31, 2021, Sarasota once again retained an independent appraiser and determined that the fair value of the assets was: Manufacturing plant (building #1) Storage warehouse (building #2) $339,610 160,950 Assume that the asset revaluation surplus for the buildings was prepared based on a class-by-class basis rather than on an individual asset basis as required by IAS 16. Prepare the journal entries for 2020 and 2021 that relate to the buildings. (Ignore the machinery accounts since they are accounted for using the cost model.) (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. Record the amounts for Building #1 and #2 and for Machinery seperately. Do not combine these amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit 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 revalue (Building #1) and (Building #2)) Date Account Titles and Explanation Debit Credit Dec. 31, 2021 > (To record depreciation on Building #2) Dec. 31, 2021 (To revalue (Building #1) and (Building #2))
