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How transaction should accounted for each reporting year

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Reference no: EM132698720

Enterprise has a year end of 31 December. It purchased a building for $50 million on 1 January 2016 and attributed it a useful economic life of 50 years.Enterprise classified the building as PPE and accounted for it using the revaluation model.

  • On 31 December 2017, the fair value of the building was deemed to be $53 million. The total useful economic life of the building remained unchanged.
  • By 31 December 2018, there was a collapse in property prices. The fair value of the building was deemed to be $44 million. Enterprise does not transfer for the excess depreciation arising from a revaluation, from reserves.

Problem 1: Discuss how this transaction should have been accounted for each reporting year.

Reference no: EM132698720

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