Synthetic Fuels Corporation Prepares Its Financial Statements According to IFRS

Essay

Synthetic Fuels Corporation prepares its financial statements according to IFRS. On June 30, 2018, the company purchased equipment for $350,000. The equipment is expected to have a seven-year useful life with no residual value. Synthetic uses the straight-line depreciation method for all depreciable assets. On December 31, 2018, the end of the company's fiscal year, Synthetic chooses to revalue the machinery to its fair value of $299,000.
Required:
1. Calculate depreciation for 2018.
2. Prepare the journal entry at the end of 2018 to record the revaluation of the equipment.
3. Calculate depreciation for 2019.
4. Repeat requirement 2 assuming that the fair value of the equipment at the end of 2018 is $338,000.