On December 31, 2021, Kartazen Co. decided to lease out under operating lease one of its buildings that was previously u
Posted: Sun Jun 05, 2022 5:15 pm
On December 31, 2021, Kartazen Co. decided to lease out under
operating lease one
of its buildings that was previously used as office space. The
building has an original cost
of 12,000,000 and accumulated depreciation of 8,000,000 as of
January 1, 2021. Annual
depreciation is 400,000. Kartazen Co. uses the fair value model for
investment property.
The fair value of the building on December 31, 2021 is 6,000,000.
The entry to record the
transfer of the building to investment property includes a
a. credit to gain on reclassification for 2,000,000.
b. credit to revaluation surplus for 2,000,000.
c. debit to building for 12,000,000.
d. credit to revaluation surplus for 2,400,000.
operating lease one
of its buildings that was previously used as office space. The
building has an original cost
of 12,000,000 and accumulated depreciation of 8,000,000 as of
January 1, 2021. Annual
depreciation is 400,000. Kartazen Co. uses the fair value model for
investment property.
The fair value of the building on December 31, 2021 is 6,000,000.
The entry to record the
transfer of the building to investment property includes a
a. credit to gain on reclassification for 2,000,000.
b. credit to revaluation surplus for 2,000,000.
c. debit to building for 12,000,000.
d. credit to revaluation surplus for 2,400,000.