Question

Current Attempt in Progress A partial statement of financial position of Ivanhoe Ltd. on December 31, 2019, showed the following property, plant, and equipment assets accounted for under the cost model (accumulated depreciation includes depreciation for 2019): upport Buildings Less: accumulated depreciation Equipment Less: accumulated depreciation $337.000 137.000 $200,000 $125.000 45.000 80.000 Ivanhoe uses straight-line depreciation for its building remaining useful life of 20 years, no residual values and for its equipment remaining useful life of years.no residual value). Ivanhoe applies IFRS and has decided to adopt the revaluation model for its building and equipment, effective December 31, 2019. On this date an independent appraiser assessed the fair value of the building to be $157,000 and that of the equipment to be $90,000. (a) - Your answer is partially correct.

Answer 1

Revaluation of Fixed Assets is the process of increasing or decreasing the carrying value of Non-Current Assets (Fixed Assets). Initially the assets are recognized at cost. In case of revaluation the carrying value is compared with the fair value and the difference is recognized as Gain or Loss of Revaluation.

Calculation for Revaluation of Building
	$$
Carrying Value of Building as on Dec 31, 2019	$200,000
Less: Fair Value of Building	$157,000
Loss from Revaluation	$43,000
Calculation for Revaluation of Equipment
	$$
Carrying Value of Equipment as on Dec 31, 2019	$80,000
Less: Fair Value of Building	$90,000
Gain from Revaluation	$10,000

Here are the necessary journal entries

Date	Account Titles and Explanation	Debit	Credit
Dec.31, 2019	Accumulated Depreciation - Building	$137,000
	Building		$137,000
	(To eliminate the accumulated depreciation
Dec.31, 2019	Revaluation Loss (Refer Working above)	$43,000
	Building		$43,000
	(To adjust the Building account to fair value)
Dec.31, 2019	Accumulated Depreciation - Equipment	$45,000
	Equipment		$45,000
	(To eliminate the accumulated depreciation)
Dec.31, 2019	Equipment	$10,000
	Revaluation Gain (refer working above)		$10,000
	(To adjust the equipment account to fair value)