Prepare the accounting journal entries for the building

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Question - Kayleen Ltd acquired a new building for office purpose on 1 January 2018 at $3 million. The building was expected to have a useful life of 20 years and a residual value of $150,000. The company used straight-line method to depreciate its building. The fair value of the building was $3.3 million and $2.85 million on 31 December 2018 and 2019 respectively.

On 1 July 2020, Kayleen Ltd rented out the building to an unrelated party in an arm's length transaction. The company used fair value model to account for its investment properties. The fair value of the building was $3 million on 1 July 2020. The building was eventually sold for $3.1 million on 31 December 2020.

Kayleen Ltd used the revaluation model for its property plant and equipment and would not transfer revaluation surplus to retained earnings annually. It used fair value model for its investment properties.

Required -

(a) Prepare the accounting journal entries for the building on 31 December 2018 and 2019. Show your workings.

(b) Prepare the accounting journal entries for the building in 2020. Show your workings.

Reference no: EM133057807

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