Company 1 -X Company was formed on 12/31/2015 when its sole shareholder contribu
ID: 2583928 • Letter: C
Question
Company 1 -X Company was formed on 12/31/2015 when its sole shareholder contributed land worth S200,000. The company had the following balance sheet on 12/31/2015 Assets Land S200,000 Common Stock $200,000 The company rents the land to a tenant. The tenant pays $24,000 annual rent in cash. The company has one expense, property taxes of $14,000 that is paid on December 30 of each year. X Company uses IFRS and the revaluation method (See IAS 16). The land has the following fair values on the respective dates. Date 12/31/16 12/31/17 12/31/18 Fair Value $220,000 S250,000 $235,000 Companv 2- H Company also was formed on 12/31/2015 when its sole shareholder contributed land worth S200,000. The company had the following balance sheet on 12/31/2015 Assets Equity Land S200,000 Common Stock S200.000 The company rents the land to a tenant. The tenant pays $24,000 annual rent in cash. The company has one expense, property taxes of $14,000 that is paid on December 30 of each year. H Company also uses IFRS and the revaluation method (See LAS 16). The land has the following fair values on the respective dates. Date 12/31/16 12/31/17 12/31/18 Fair Value S180,000 S185,000 S205,000 For X Company, fill in the missing financial statement amounts in the green cells. For H Company, fill in the missing financial statement amounts in the blue cells. The net income cells already have formulas in them that will automatically update when you enter amounts in green or blue cells.Explanation / Answer
under the revaluation model, an item of property, plant and equipment whose fair value can be measured reliably is carried at a revalued amount, which is its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations must be made regularly and kept current. Revaluation increases are recognised in other comprehensive income and accumulated in equity, unless they reverse a previous revaluation decrease. Revaluation decreases are recognised in profit or loss unless they reverse a previous revaluation increase.
For X company
Income statement 2016 2017 2018
other gains 0 0 0
Statement of compehensive income
other comprehensive income 20000 30000 (15000)
comprehensive income 0 0 0
Statement of financial position
Assets
land 220000 250000 235000
Total equity
Retained earnings 20000 50000 35000
Accumulated other comprehensive income 0 0 0
For company H
Income statement 2016 2017 2018
other gains 0 0 0
Statement of compehensive income
other comprehensive income (20000) 5000 20000
comprehensive income 0 0 0
Statement of financial position
Assets
land 180000 185000 205000
Total equity
Retained earnings - 5000 25000
Accumulated other comprehensive income 0 0 0
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