Mozart Ltd Acquired a Building for $1

question 22

Multiple Choice

Mozart Ltd acquired a building for $1.5 million.Management estimates the value of land to be 40% of cost.The building is estimated to have a useful life of 50 years.After 25 years,the property's fair value is estimated at 1.2 million.It is expected that the life of the building will remain the same and salvage value is expected to be $100 000.Which of the following statements is correct at end of year 25 with respect to the revaluation?

• A) Net profit will increase by $100 000.
• B) Net profit will increase by $120 000.
• C) Net profit will decrease by $220 000.
• D) Net profit is unaffected as the credit is through the asset revaluation reserve.

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Definitions:

Reposition

The act or process of placing or arranging something in a different position.

Excursion

The movement of a structure or part away from its resting position, often used in the context of muscle movement or joint mobility.

Extension

The movement by which the two ends of any jointed part are drawn away from each other, increasing the angle between them.

Adduction

The movement of a limb or other body part toward the midline of the body or toward another body part.