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    Revaluation

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    Artisan
    The document provides data on the revaluation of machinery, including original cost, replacement cost, accumulated depreciation, and age. It asks for calculations of appreciation, carrying amount, depreciated replacement cost, revaluation surplus, original useful life, and journal entries to record the revaluation, annual depreciation, and realization of the revaluation surplus. The solution shows the calculations and journal entries to fully address all items required by the document.

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    Revaluation

    Uploaded by

    Artisan
    781 views4 pages
    The document provides data on the revaluation of machinery, including original cost, replacement cost, accumulated depreciation, and age. It asks for calculations of appreciation, carrying amount, depreciated replacement cost, revaluation surplus, original useful life, and journal entries to record the revaluation, annual depreciation, and realization of the revaluation surplus. The solution shows the calculations and journal entries to fully address all items required by the document.

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    The document provides data on the revaluation of machinery, including original cost, replacement cost, accumulated depreciation, and age. It asks for calculations of appreciation, carrying amount, depreciated replacement cost, revaluation surplus, original useful life, and journal entries to record the revaluation, annual depreciation, and realization of the revaluation surplus. The solution shows the calculations and journal entries to fully address all items required by the document.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    781 views4 pages

    Revaluation

    Uploaded by

    Artisan
    The document provides data on the revaluation of machinery, including original cost, replacement cost, accumulated depreciation, and age. It asks for calculations of appreciation, carrying amount, depreciated replacement cost, revaluation surplus, original useful life, and journal entries to record the revaluation, annual depreciation, and realization of the revaluation surplus. The solution shows the calculations and journal entries to fully address all items required by the document.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 4

    A company provided the following data pertaining to a machinery on the

    date of revaluation:

    Replacement
    Cost cost
    Machinery 7,500,000 10,500,000
    Accumulated depreciation 1,500,000
    Age of asset (years) 6

    Required:
    1. Appreciation or revaluation increase
    2. Carrying amount
    3. Depreciated Replacement cost
    4. Revaluation surplus
    5. What is the original useful life of the asset?
    6. Prepare the journal entry to record the revaluation (use proportional
    approach)

    7. Prepare journal entry to record annual depreciation

    8. Prepare journal entry to record the piecemeal realization of the


    revaluation surplus
    Solution

    Cost Replacement cost


    Machinery 7,500,000 10,500,000
    Accumulated Depreciation -1,500,000 -2,100,000
    CA/SV/RS 6,000,000 8,400,000
    Amount
    Other solutions: (if necessary)
    3,000,000 Appreciation or revaluation increase = Replacement Cost
    6,000,000 Carrying Amount = Cost - Accumulated Depreciation,cos
    8,400,000 Depreciated Replacement Cost = Replacement Cost - Acc
    2,400,000 (1,500,000/7,500,000) 20%
    30 years (20% x 10,500,000)= 2,100,000 Accumulated

    Machinery 3,000,000 Revaluation Surplus = Depreciated Replacement Cost - Ca


    Accumulated Depreciation 600,000 Originial Useful Life = 30 years
    Revaluation Surplus 2,400,000 Annual Depreciation = Accumulated Deprecia
    Depreciation 350,000 Original Useful Life = Cost/Annual Depreciatio
    Accumulated Depreciation 350,000

    Revaluation Surplus 100,000 Original Useful Life - Age of Asset = 30-6 = 24


    Retained Earnings 100,000 Depreciation on cost (6,000,000/24) + Deprec
    Appreciation
    3,000,000
    -600,000
    2,400,000

    uation increase = Replacement Cost - Cost = 10,500,000 - 7,500,000 = 3,000,000


    ost - Accumulated Depreciation,cost = 7,500,000 - 1,500,000 = 6,000,000
    ment Cost = Replacement Cost - Accumulated Depreciation, replacement cost = 10,500,000 - 2,100,000 = 8,400,000 or 10,500,000 x 80%
    0/7,500,000) 20%
    ,500,000)= 2,100,000 Accumulated Depreciation, replacement cost

    Depreciated Replacement Cost - Carrying Amount = 8,400,000 - 6,000,000 = 2,400,000

    epreciation = Accumulated Depreciation,cost/Age of Asset = 1,500,000/6years = 250,000


    seful Life = Cost/Annual Depreciation = 7,500,000/250,000 = 30 years

    ge of Asset = 30-6 = 24
    tion on cost (6,000,000/24) + Depreciation on appreciation (2,400,000/24) = Depreciation on Revalued Amount = 250,000 + 100,000 = 3
    400,000 or 10,500,000 x 80% = 8,400,000

    ount = 250,000 + 100,000 = 350,000

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