Prepare the journal entries to revalue the buildings at june

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Question -

Part A - On 30 June 2018, the statement of financial position of Koala Ltd showed the following noncurrent asset after charging depreciation:

Buildings 300,000

Accumulated Depreciation 100,000

Carrying Amount 200,000

The company adopted fair value for the valuation of its non-current assets. This has resulted in the recognition in previous periods of an asset revaluation surplus for the building of $14,000. On 30 June 2019, an independent value assessed the fair value of the building to be $160,000.

Required - Prepare the journal entries to revalue the buildings as at 30 June 2019. Note: Ignore tax effect for this question.

Part B - In accordance with AASB 116 Property Plant and Equipment (PPE) and entity has an option to elect the cost model or fair value (revaluation model) for subsequent measurement of PPE. Where an entity elects to use either cost or fair value as the basis for measuring property, plant and equipment, can it elect to switch to the other method at a later stage. Discuss.

Reference no: EM132569362

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