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On 1 January 2016, Shakira Ltd purchased a building that had an estimated useful life...

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Accounting

On 1 January 2016, Shakira Ltd purchased a building that had an estimated useful life of eight years with no disposal value at $180,000. Shakira Ltd used the revaluation model to subsequently measure the building and straight-line method for depreciation. For the financial year ended on 31 December 2017 and 2018, the fair values assessed by the management of Shakira Ltd were $156,000 and $120,000, respectively. Shakira Ltd complied with AASB 116 Property, Plant and Equipment and used net method to record revaluations. Assuming depreciation expense for the financial period ended on 31 December 2017 had been recorded, which of the following is the appropriate journal entry to record the revaluation effect on 31 December 2017?

A.

Dr Revaluation Expense $15,000

Cr Building $15,000

B.

Dr Building $21,000

Cr Revaluation Surplus $21,000

C.

Dr Building $24,000

Cr Revaluation Income $21,000

Cr Revaluation Surplus $3,000

D.

Dr Accumulated Depreciation $45,000

Cr Building $24,000

Cr Revaluation Surplus $21,000

E.

Dr Accumulated Depreciation $22,500

Dr Revaluation Expense $1,500

Cr Building $24,000

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