Smith & Jones Ltd Owns Equipment That Was Purchased for $56

Smith & Jones Ltd owns equipment that was purchased for $56 000 and has accumulated depreciation of $14 000.The following market value information was gathered about the equipment $$\begin{array} { | l | l | } \hline \text { Equivalent machine } & \$ 55860 \\\hline \text { New machine } & \$ 70000 \\\hline\end{array}$$ The equipment has a remaining useful life to the entity of 10 years.What are the appropriate journal entries to record the revaluation under the gross method and the net-amount method?

A) $\text { Gross method. }$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Equipment } & 14000 & \\\hline \mathrm{Cr} & \text { Accumulated depreciation-equipment } & & 140 \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 13860\\\hline\end{array}$

$\text { Net-amount method. }$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Accumulated depreciation-equipment } & 14000 & \\\hline \mathrm{Cr} & \text { Equipment } & & 14000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Equipment } & 13860 & \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 13860 \\\hline\end{array}$

B) $\text { Gross method. }$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Equipment } & 14000 & \\\hline \mathrm{Dr} & \text { Accumulated depreciation-equipment } & 13860 & \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 14140 \\\hline \mathrm{Cr} & \text { Equipment } & & 13720\\\hline\end{array}$

$\text { Net-amount method. }$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Accumulated depreciation-equipment } & 14000 & \\\hline \mathrm{Cr} & \text { Equipment } & & 14000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Equipment } & 14000 & \\\hline \mathrm{Cr} & \text { Accumulated depreciation } & & 140 \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 13860 \\\hline\end{array}$
C) $\text { Gross method. }$
$\begin{array}{|c|l|c|c|}\hline \mathrm{Dr} & \text { Accumulated depreciation-equipment } & 14000 & \\\hline \mathrm{Cr} & \text { Equipment } & & 14000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Equipment } & 13860 & \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 13860 \\\hline\end{array}$

$\text { Net-amount method. }$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Equipment } & 14000 & \\\hline \mathrm{Cr} & \text { Accumulated depreciation - equipment } & & 140 \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 13860 \\\hline\end{array}$
D) $\text { Gross method. }$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Equipment } & 70000 & \\\hline \mathrm{Cr} & \text { Accumulated depreciation - equipment } & & 42140 \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 27860\\\hline\end{array}$

$\text { Net-amount method. }$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Accumulated depreciation - equipment } & 14000 & \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 14000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Equipment } & 13860 & \\\hline \mathrm{Cr} & \text { Asset revaluation reserve } & & 13860 \\\hline\end{array}$