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Prepare the necessary journal entries for the revaluation

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Reference no: EM132948794

Jasper Ltd adopts the revaluation model for measuring buildings. As of 30 June 2021, Jasper Ltd has one building. The following information relating to the building is available:

  • Purchased on 2 July 2009 at a cost of $150,000. Estimated residual value $15,000, and useful life 20 years
  • Extensions completed on 30 June 2018, at a cost of $45,000. After the extensions the building's useful life was increased by 5 years. The residual value did not change.
  • The building was revalued upwards on 30 June 2020 to a fair value of $130,000. This resulted in a gain on revaluation of $10,656. The residual value did not change. However Jasper Ltd determined that the building had a remaining useful life of 10 years.
  • On 30 June 2021, and prior to recording depreciation for the year, Jasper Ltd obtained a fair value for the building at $100,000.

The company uses straight-line depreciation, the reporting period ends 30 June, the tax rate is 30%, and journal entries are recorded to the nearest dollar.

Required:

Problem 1: Prepare the necessary journal entries for the revaluation of the building on 30 June 2021 ONLY.

Reference no: EM132948794

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