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Formulate the journal entries required

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Question - On July 1, 2017, Nemo Ltd., a publicly listed company, acquired a building from Dory Ltd. On the transaction date, a reliable, independent valuator assessed the fair values of the building is $400,000. The building is owned by the company, and the land that the building is situated on is owned by the local municipality and is provided free of charge to the owner of the buildings as a stimulus to encourage local employment.

In exchange for the acquisition of the building, Nemo issued 100,000 common shares. Nemo' shares are thinly traded, and in the most recent sale of Nemo' shares on the Toronto Stock Exchange, the price is $3.50 per share. At the time of acquisition, the building was considered to have an expected remaining useful life of 10 years. Nemo uses straight-line depreciation with no residual values.

At December 31, 2017, Nemo' fiscal year end, Nemo recorded the correct depreciation amount for the six months that the building was in use. An independent appraisal concluded that the building had the fair value of $387,000.

At December 31, 2018, Nemo once again retained an independent appraiser and determined that the fair value of the building was $340,000.

Assuming that the building is accounted for under the revaluation model (using the asset adjustment method), formulate the journal entries required for 2017 and 2018 to record the purchase, depreciation and revaluation of the building.

Reference no: EM132839426

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