Appraised value/

Asset Fair value Ratio % Allocated cost

Land $476.190 15% $432.900
Building $793.650 25% $721.500
Equipment $1.269.840 40% $1.154.400
Inventories $634.920 20% $577.200
Total $3.174.600 100% $2.886.000

The journal entry to record the purchase of assets by Watson:

Debit Land $432.900

Debit Building $721.500
Debit Equipment $1.154.400
Debit Inventories $577.200
Credit Cash $2.886.000

Phải trình bày số liệu mà đề bài không cho

Ratio (%) Land
Building
Equipment
Inventories

Allocated cost Land

Building
Equipment
Inventories
 chỉ có 364/365 nên ko đc làm tròn 50,000

Year 20X2

Depreciation expense 31/12/20X2 = (cost - residual value)/useful life = ((500,000-0)/10)/365*364= $49,863

Jan 2, 20X2
(Dr) Equipment
(Cr) Cash $49,863
Dec 31, 20X2
(Dr) Depreciation expense $49,863
(Cr) Acc. Depreciation $49,863

Fair value $468,000 > CA

$450,137 => Gain on
Gross method (proportionate method) Gain/ Loss = Fair value - Carrying amount = 468,000 - 450,137 = $17,863 revaluation
Before Ratio % Increase After
Cost $500,000 111% =500,000*100/450,137 $19,828 =17,863*111% $519,828
Less: Accu.Depreciation $49,863 11% = 49,863 *100/ 450,137 $1,965 =17,863*11% $51,828
Carrying amount $450,137 100% $17,863 $468,000

(Dr) Equipment $19,828

(Cr) Accumulated Depreciation $1,965
(Cr) Revaluation reverse (OCI) $17,863

Year 20X3
Depreciation expense 31/12/20X3 = (cost - residual value)/useful life =(468,000-0)/(10-1)= 52,000
Dec 31, 20X3 (Dr) Depreciation expense $52,000
(Cr) Accumulated depreciation $52,000

Fair value $380,000 < CA

$416,000 => Loss on
Gross method (proportionate method) Gain/Loss = Fair value - Carrying amount =380,000-416,000 = $36,000 revaluation
Ratio % Decrease After
Cost $468,000 112.5% =468,000*100/416,000 $40,500 =36,000*112.5% $427,500
Less: Accu.Depreciation $52,000 12.5% = 52,000 *100/ 416,000 $4,500 =36,000*12.5% $47,500
Carrying amount $416,000 100% $36,000 $380,000

(Dr) Accumulated Depreciation $4,500

(Dr) Statement of P/L (loss on revaluation) $18,137 =36,000-17,863
(Dr) Revaluation reverse (OCI) $17,863
(Cr) Equipment $40,500

Year 20X4
Depreciation expense 31/1/20X4 = (cost - residual value)/useful life = (380,000-0)/(10-2)= 47,500
Dec 31, 20X4 (Dr) Depreciation expense $47,500
(Cr) Accumulated depreciation $47,500

Fair value $335,000 > CA

$332,500 => Gain on
Gross method (proportionate method) Gain/Loss = Fair value - Carrying amount =335,000-332,500 = $2,500 revaluation
Ratio % Increase After
Cost $380.000 114.3% =380,000*100/332,500 $2,857.5 =2,500*114.3% $382,858
Less: Accu.Depreciation $47,500 14.3% = 47,500 *100/ 332,500 $357.5 =2,500*14.3% $47,858
Carrying amount $332,500 100% $ 2,500 $335,000

(Dr) Equipment $2,857.5

(Cr) Statement of P/L $ 2,500
(Cr) Accumulated depreciation $357.5

Year 20X5
Depre exp (20x5) (335,000/7)*2/365 = 262
(Dr) depre exp 262
(Cr) Acc.depre 262

Jan 2, 20X5 (Dr) Cash $330,000

(Dr) Loss on sales $5,000
(Cr) Equipment $335,000

2/
Statement of Financial Position
20X2 20X3 20X4

Non-current ASSETs
Property, Plant, Equipment $468.000 $380.000 $335.000
Acc. Depre
Carrying amount

Owner's Equity
Revaluation reverse (OCI) $17,863
 capitalized cost = purchase price (NG) + directly attributable cost +
decommission cost
= deductible sales tax is not included in capitalized cost => not capitalized
= non deductible sales tax included trong NG => capitalized
= in- transit insurance => directly relating to acquiring equipment (DAC) =>
capitalized
= other types of insurance costs => not directly relating to acquiring equipment
=> not capitalized