Reference no: EM132723389

Problem - Sammi Ltd. on December 31, 2020, showed the following equipment asset:

Equipment $200,000

Less: accumulated depreciation 56,000 144,000

All depreciation has been calculated for 2020. Sammi uses straight-line depreciation for its equipment and at the end of 2020 the remaining useful life of the equipment is 5 years with no residual value. Sammi uses the revaluation model to account for equipment and revalues the equipment every two years.

On December 31, 2020, an independent appraiser assessed the fair value of the equipment to be $130,000.

The only other time the equipment was revalued was on December 31, 2018, and the equipment was revalued with a gain on revaluation of $6,000.

Required -

(a) Prepare the necessary general journal entry(ies), if any, to revalue the equipment as at December 31, 2020, using the asset adjustment method (as done in class).

(b) Prepare the entry to record depreciation expense for the year ended December 31, 2021.

(c) Show how the equipment would be presented on the December 31, 2021 classified statement of financial position.