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In the first year of business, Newport Ltd purchased land for $5 million. In the...

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Accounting

In the first year of business, Newport Ltd purchased land for $5 million. In the second year, a reputable, independent property valuer's report shows that the value of the land is estimated at $2 million. In the third year, the value of the land is estimated at $6 million. Newport Ltd uses the revaluation method. What would be the journal entry to record this revaluation in the third year?

DR Land 4m; CR Gain on revaluation 3m; CR Revaluation surplus 1m

DR Land 4m; CR Gain on revaluation 1m; CR Revaluation surplus 3m

Dr Land 4m; CR Gain on revaluation 2m; CR Revaluation surplus 2m

Dr Land 4m; CR Gain on revaluation 4m

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