Seagull Marinas Ltd owns land that was purchased for $300,000 to be used as the future site of a boat shed. Due to the development of a resort in the vicinity, the land's fair market value had risen to $480,000 on 30 June 2002. A revaluation undertaken on 30 June 2005 of $150,000 reflects the effect of the failure of resort development and local concerns about the protection of the nesting sites of endangered sea birds located near the land. What are the journal entries required to record the revaluations on 30 June 2002 and 30 June 2005?
E) None of the given answers.

Question

Quizplus · Accepted Answer

On 30 June 2002, the fair market value of the land increased, resulting in an upward revaluation. The journal entry to record the revaluation is: 
Land revaluation surplus $180,000 
  Land $180,000

On 30 June 2005, the fair market value of the land decreased, resulting in a downward revaluation. The journal entry to record the revaluation is: 
Land $30,000 
  Land revaluation deficit $30,000

Seagull Marinas Ltd Owns Land That Was Purchased for $300,000