Kiely Company Inc. has buildings that cost $1,000,000, with accumu- lated depreciation of $600,000 and a carrying amount of $400,000 on December 31, Year 1. On that date, Kiely Company determines that the market value for these buildings is $750,000. Kiely Company wishes to carry buildings on the Decem- ber 31, Year 1, balance sheet at a revalued amount. Under treatment 1, Kiely Com- pany would restate both the buildings account and accumulated depreciation on buildings such that the ratio of net carrying amount to gross carrying amount is 40 percent ($400,000/$1,000,000) and the net carrying amount is $750,000. To ac- complish this, the following journal entry would be made at December 31, Year 1:
Record the necessary journal entries for the elimination of accumulated depreciation and the entry to revalue the building.