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 $140,000. 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)$16,000 debit.
B)$16,000 credit.
C)$28,000 credit.
D)$28,000 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 $140,000. 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)$16,000 debit.
B)$16,000 credit.
C)$28,000 credit.
D)$28,000 debit.

Quizplus · Accepted Answer

After revaluation, the building's new carrying amount is its fair value of $140,000. With a remaining depreciable life of 5 years, the annual depreciation expense is calculated as $140,000 / 5 = $28,000. This amount is recorded as a debit because depreciation expense reduces net income.

Wilson Inc Wishes to Use the Revaluation Model for This