Revaluation model (proportionate method)
Aden Motels Inc. owns a motel that it had purchased on January 1, 2020, for $ 1.5 million cash and is accounted for in a separate account, classified as "Structures." The company is using the revaluation model to account for its structures and revalues them annually. Aden uses straight-line depreciation over the asset's 15-year useful life with no residual value.
The asset's fair value was equal to its book value on Dec. 31, 2020, and was $ 1,450,000 on Dec. 31, 2021.
Instructions
Assuming Aden uses the proportionate method to adjust for revaluation, prepare all required journal entries for 2020 and 2021.

Question

Quizplus · Accepted Answer

The Answer of Revaluation model (proportionate method)
Aden Motels Inc. owns a motel that it had purchased on January 1, 2020, for $ 1.5 million cash and is accounted for in a separate account, classified as "Structures." The company is using the revaluation model to account for its structures and revalues them annually. Aden uses straight-line depreciation over the asset's 15-year useful life with no residual value.
The asset's fair value was equal to its book value on Dec. 31, 2020, and was $ 1,450,000 on Dec. 31, 2021.
Instructions
Assuming Aden uses the proportionate method to adjust for revaluation, prepare all required journal entries for 2020 and 2021.

Revaluation Model (Proportionate Method)