The company reports buildings on a revalued basis

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The Company reports buildings on a revalued basis, using the elimination method. *** The equipment has been acquired at various times. Depreciation is 30% declining balance. The Company uses the cost method to report equipment. **** The patent relates to proprietary cooling technology. The Company purchased it at a cost of $500,000. At the time of purchase, the patent provided legal protection for 10 years. The Company uses the cost method for reporting intangible assets. Required: 1.C.1.a. Land: On January 1, 2011, the land was independently appraised to have a value of $9 million. Record the entry in 2011 for land revaluation or impairment. [2 marks] Land 5,000,000 Revaluation reservce OCI – 5,000,000 How much was the acquisition cost of the land?[1 mark] 3,000,000 1.C.1.b. Building: On January 1, 2011, the building was independently appraised to have a value of $5.4 million. Record the entry in 2011 for the building revaluation or impairment. [3 marks] Acc dep 1,500,000 Building 600,000
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OCI reservce Re-evaluation 900,000 Record the entry for building depreciation for year 2011. [2 marks] Dep 180,000 Acuu 180,000 1.C.1.c. Equipment and patent: The company has identified the equipment and patent as a single cash generating unit (CGU). In early 2011, a competitor has made an important advancement in refrigeration technology that management expects to pose a challenge to International Cellars’ patent. Management projects that incremental cash flows for the next 5 years will amount to $950,000 per year for the CGU. Equipment similar to that owned by International Cellars has recently been advertised for $3.1 million in a trade magazine and management believes that amount is a fair price for the equipment. Due to its uniqueness, information on the patent’s fair value is unavailable. Record any entry or entries in 2011 for the revaluation or impairment of the equipment and patent. [8 marks] DR equipement impairment 60419 Equipment 60419
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Table of present value factors for an ordinary annuity of $1 (PVFA)
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