Question 4 (30 minutes)

Easy Company bought a piece of equipment four years ago. At December 31, 2020, the company revalued the equipment to its fair value. The following information relates to the equipment

Original cost: $1,200; Residual value: $ 200; Estimated useful life from purchase date: 10 years; Years used to December 31, 2020: 4 years; Fair value at December 31, 2020: $966; Depreciation method is straight-line.

Required:

1. Determine the depreciation expense for 2020.
2. Record the journal entry adjustment for the revaluation, using the asset adjustmentmethod.
3. Determine the depreciation expense for 2021.
4. Assume that the fair value at the end of 2022 is $468. Record the journal entry for depreciation first for 2022, and then the entry related to this new fair value for 2022.

Question 5 (25 minutes)

Buzz Bee Yard Company Apiary began operations on January 1, 2020, with the purchase of 100 bee hives for $500 total. Buzz follows IFRS and its standard on agricultural products. It has completed the first year of operations and has the following information for its bee hives at December 31, 2020:

1. Bee Hives purchase of hives as per above $ 500
2. Honey harvested during 2020 (at net realizable value) 1,900
3. Honey sold during 2020 (at net realizable value) 1,600
4. Hive maintenance costs directly traceable to hive activity in year $60
5. Company general administration costs $40
6. Fair value on Dec. 31, 2020 of hives $1,300

Required:

1. Prepare all the journal entries for Buzzs bee hives activities for 2020, as per the information in (a) to (f).

Question 6 (25 minutes)

The following events occurred in 2020:

1. June 30, 2020 A building that Big Company had purchased on January 1, 2016, for $ 10,000 was exchanged for another building owned by Other Company. Big Company exchanged its building and $1,000 cash for Other Companys building. Bigs building had a fair value of $ 9,500 at the time of the exchange. Straight-line depreciation on the building with a 40-year useful life and no R.V. has been properly charged from Jan. 1, 2016 through Dec. 31, 2019. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value. Big Companys building contained a manufacturing operation. Other Companys building was an office building.

2. Dec. 30, 2020 Machinery with a cost of $ 120 and accumulated depreciation through December 31, 2019, of $ 90 was exchanged, along with $ 15 cash, for a parcel of land with a fair market value of $ 44. Straight-line depreciation had been used for the machine. The machine had a 12-year useful life, and was 9 years-old as at Dec. 31, 2019.

3. Big Company replaced a roof on a building that it purchased in 2008. (12 years old as at Dec. 31, 2020.) The building cost $400,000 in 2008, and had an estimated life of 40 years, with no residual value. The new roof costs $25,020 to install. Big Company estimated that prices for goods and services have increased by 80% since 2008 . The roof component was not separately identified in the company accounts, but, of course, was included in the building asset at that time.

Required: Prepare ALL journal entries for 2020 related to the three situations above. Each situation may require more than one entry.