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Garrett Corporation paid $200,000 to acquire land, buildings, and equipment. At the time of acquisition, Garrett...

Garrett Corporation paid $200,000 to acquire land, buildings, and equipment. At the time of acquisition, Garrett paid $20,000 for an appraisal, which revealed the following values: land, $100,000; buildings, $125,000; and equipment, $25,000.

Required:

1. What cost should the company assign to the land, buildings, and equipment, respectively?
2. Assume that Garrett uses IFRS and chooses to use the revaluation model to value its property, plant, and equipment. At the end of the year, the book value of the land, buildings, and equipment are $88,000, $104,000, and $18,000, respectively. The company determines that the fair value of the land, buildings, and equipment at the end of year is $110,000, $106,000, and $15,000, respectively. Prepare the journal entries that Garrett should make to value its property, plant, and equipment.
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Answer #1

$200,000.00 $ 20,000.00 100,000.00 $250,000.00 S 88,000.00(2000+20000) (100000/250000) 1a Lump-sum price Cost of appraisal Fair value of land Total of fair value of all assets Value of land $ 20,000.00 $ 20,000.00 125,000.00 $250,000.00 $110,000.00丨=(200000+20000)*( 12500O/250000) 1b Lump-sum price Cost of appraisal Fair value of buildin Total of fair value of all assets Value of land $200,000.00 $ 20,000.00 $25,000.00 $250,000.00 $ 22,000.00(200000+20000) (25000/250000) 1c Lump-sum price Cost of appraisal Fair value of equipment Total of fair value of all assets Value of land Particulars Land Buildin Equipment Cash To record the purchase of land, building and equipment DR $ 88,000.00 $ 11,000.00 $ 22,000.00 2a CR $ 220,000.00 2b Particluars Depreciation expense Accumulated depreciation To record the depreciation charged on building and equipment DR CR $ 10,000.00 $ 10,000.00 Particluars Land Buildin Revaluation surplus To record the increase in fair values of land and building due to revaluation DR $ 22,000.00 $ 2,000.00 2c CR $ 24,000.00 Particluars Revaluation expense Equipment To record the decrease in fair value of equipment due to revaluation 2d DR CR $ 3,000.00 $ 3,000.00

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