(Appendix) ABC Adheres to IFRS and Applies the Revaluation Model

question 114

Essay

(Appendix) ABC adheres to IFRS and applies the revaluation model to account for its Machinery.Prior to 2009,there was no balance in the company's Revaluation Surplus (OCI) accounts relating to its long-lived assets.The following year-end data pertains to the company's machinery: $$\begin{array} { l c c l } & \text { Cost } & \text { Accumulated Depreciation } & \text { Fair Value } \\2009 & \$ 180 & 10 & \$ 120 \\2010 & \$ 180 & 20 & \$ 125 \\2011 & \$ 180 & 30 & \$ 130\end{array}$$ Required:
For each year,provide the revaluation entries assuming that ABC applies:
a) The elimination method and,
b) The proportional method.

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Definitions:

Short Run

A period in economics where the output is influenced by the level of production capacity, and certain economic conditions or costs cannot change.

Long Run

In economics, a period in which all inputs can be adjusted by firms, and there are no fixed costs, allowing for full industry adjustment.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, begins to decrease.

Marginal Cost

The change in total production cost that arises when the quantity produced is incremented by one unit.