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Prepare the journal entry necessary to revalue the building

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Reference no: EM132557173

As at 30 June 2020 Nicky Ltd had the following balances for building before preparing end of year adjustments:

Building (at fair value) $845,000

Accumulated depreciation - building (40,000)

The building is measured using the revaluation model. Nicky Ltd performs revaluations on the building every two (2) years. The building was last revalued on 30 June 2018, whereby a gain on revaluation of $32,000 was recorded in other comprehensive income. As of 30 June 2018, the building had a remaining useful life of 20 years and a residual value of $45,000.

On 30 June 2020 Nicky Ltd obtained a fair value for the building at $730,000. Depreciation expense on the building for 30 June 2020 has not yet been recorded. The tax rate is 30%.

Required:

Question 1: Prepare the journal entries necessary to revalue the building on 30 June 2020. Show all working out.

Reference no: EM132557173

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