Miller Company follows IFRS and applies revaluation accounting to plant assets with a carrying value of...
Miller Company follows IFRS and applies revaluation accounting to plant assets with a carrying value of $900,000, a useful life of 3 years, and no salvage value. Depreciation is calculated on the straight-line basis. At the end of year 1, independent appraisers determine that the asset has a fair value of $990,000. Miller’s journal entry to record depreciation for year one will include:
| debit to Accumulated Depreciation for $300,000. |
| credit to Accumulated Depreciation for $30,000. |
| debit to Depreciation Expense for $300,000. |
| debit to Depreciation Expense for $330,000. |
Homework Answers
Solution: debit to Depreciation Expense for $300,000
Explanation: The journal entry for depreciation will include a debit the Depreciation Expense account (reflected in the income statement) and credit to Accumulated Depreciation account (reflected in the balance sheet as a contra account which decreases the amount of fixed assets).
Depreciation for year one: $900,000 / 3 years = $300,000
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