Wilson Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | }
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 80,000 \
\hline
\end{array}$$ The fair value for the property is $40,000. Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years, how much depreciation expense would be recorded in the year subsequent to the revaluation?
A)8,000 credit.
B)8,000 debit.
C)16,000 credit.
D)16,000 debit.

Question

Wilson Inc wishes to use the revaluation model for this property: $$\begin{array} { | l | r | } 
\hline & \text { Before Revaluation } \
\hline \text { Building Gross Value } & 120,000 \
\hline \text { Building Accumulated Depreciation } & 40,000 \
\hline \text { Net carrying value } & 80,000 \
\hline
\end{array}$$ The fair value for the property is $40,000. Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years, how much depreciation expense would be recorded in the year subsequent to the revaluation?
A)8,000 credit.
B)8,000 debit.
C)16,000 credit.
D)16,000 debit.

Quizplus · Accepted Answer

After revaluation, the new carrying amount of the property is its fair value of $40,000. With a remaining depreciable life of 5 years, the annual depreciation expense is $40,000 / 5 = $8,000, recorded as a debit to reflect the expense.

Wilson Inc Wishes to Use the Revaluation Model for This