Page 51 - CFA Lecture Day 9 Slides
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Session Unit 8:
29. Long-lived Assets (C/B/C/A/A/A/A)
tanties
B. Under the revaluation method, Metcalf reports the equipment on the balance sheet at fair value. At the end of last year, an $80,000 loss was recognized
(from $800,000 to $720,000) in the income statement. Any recovery is recognized in the income statement to the extent of the loss. Any remainder is recognized
in shareholders’ equity as revaluation surplus. Thus, at the end of this year, an $80,000 gain is recognized in the income statement, and a $10,000 revaluation
surplus is recognized in shareholders’ equity.
