Problem 2

Synthetic Fuels Corporation prepares its financial statements according to IFRS. On June 30, 2019, the company purchased equipment for $540,000. The equipment is expected to have a five-year useful life with no residual value. Synthetic uses the straight-line depreciation method for all depreciable assets and chooses to revalue the equipment. Fair value of the equipment was $524,880 at 12/31/2019 and $354,348 at 12/31/2020, respectively.

Required:

1. Calculate the depreciation for 2019 and prepare the journal entry to record it.

2. Prepare the journal entry to record the revaluation of the equipment at 12/31/2019 (Show supporting calculations).

3. Calculate the depreciation for 2020 and prepare the journal entry to record it.

4. Prepare the journal entry to record the revaluation of the equipment at 12/31/2020 (Show supporting calculations).