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Assignment Ch.7 Questions
Assignment Ch.7 Questions
BE7-16 Subsequent changes in fair value; disposal; property, plant and equipment
Koh Brothers Limited acquired a factory for $54 million on June 30, 2023 to produce hospital
machines and equipment. The company estimated the factory has a useful life of 25 years with
$2 million in residual value at the end of its useful life. The company adopted a straight-line
depreciation method for all its property, plant and equipment. The factory’s market value
appreciated steadily to $60 million at the end of the company’s financial year, December 31,
2023. On June 30, 2024, the factory was sold for cash at $59 million. Show the journal entries
if Koh Brothers Limited account for the factory using (a) the cost method, and (b) the
revaluation method.