McDonald Corp owns a building with an original cost of $2,000,000 and accumulated depreciation at the balance sheet date of $300,000 . Based on a recent appraisal, the fair value of the building is $1,800,000. Required: 1 . At what amount will the
building be reported on the year-end balance sheet if McDonald follows U.S. GAAP? 2 . Does McDonald have a choice in the amount to report for the building if instead it follows IFRS? What are those choices?
1 . $2,000,000 – $300,000 = $1,700,000.
2 . Under IFRS, McDonald has a choice to present the building at either historical cost less accumulated depreciation ($2,000,000 – $300,000 = $1,700,000) or fair value of $1,800,000.
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