Smith Inc Wishes to Use the Revaluation Model for This

question 92

Multiple Choice

Smith Inc wishes to use the revaluation model for this property: The fair value for the property is $150,000. What amount would be booked to the "accumulated depreciation" account if Smith chooses to use the elimination method to record the revaluation?

• A)$60,000 debit
• B)$60,000 credit
• C)$90,000 credit
• D)$150,000 debit

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Definitions:

Prior Service Cost Amortization

involves the gradual recognition of the expenses related to pension plan benefits earned by employees in previous periods, over current and future periods.

Defined Benefit Pension Plan

A retirement plan where employee benefits are calculated using a formula that considers factors like length of employment and salary history, with the employer bearing the investment risk.

Projected Benefit Obligation

The present value of all the benefits earned by employees, according to their pension plan up to the measurement date.

Amortization of Prior Service Cost

The process of gradually recognizing the costs of benefits earned by employees in earlier periods in the pension expense over the service life of the employees.