Reference no: EM13928354
Assume the following. Paris Company purchased a parcel of land on January 1, 2008, for $900,000. It constructed a building on the land at a cost of $4,500,000. The building was occupied on January 1, 2011, and is expected to have a useful life of 40 years and an estimated salvage value of $1,500,000. As of December 31, 2012, and 2013, the fair value of the land had not been formally revalued because the real estate market had not changed significantly. Due to a jump in real estate prices, during 2014 the value of the land had increased to $975,000, and the fair value of the building was $4,500,000. The salvage value of the building is still estimated at $1,500,000. The land and the building were reevaluated by the company in 2014.
Required:
a. Under U.S. accounting rules, what amount would be reported on the company's 2013 and 2014 balance sheets for the land and for the building? Show any necessary computations.
b. Under U.S. accounting rules, what amount of depreciation expense would be reported in 2014 for the building? Show any necessary computations.
c. Under the IFRS revaluation model, what amount would be reported on the company's 2013 and 2014 balance sheets for the land and for the building? Show any necessary computations.
d. Under the IFRS revaluation model, what amount of depreciation expense would be reported in 2014 for the building? Show any necessary computations.
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