Corvette the leading carmanufacturing company acquired a machine for Rs.125,000
ID: 2447576 • Letter: C
Question
Corvette the leading carmanufacturing company acquired a machine for Rs.125,000 on Jan 1,2004: estimated life was 8 years. Depreciation is charged onstraight line method. On Jan 1, 2009: the machine was revalued atRs.70,000.Apart from recording revaluation entry, no other entrieshave been passed
Required: Calculate thevalue of depreciation expense and pass journal entry in accordancewith IAS-16
Calculate the value of revaluation surplus and pass journal entryin accordance with IAS-16
Explanation / Answer
Had there been no change in the estimate of useful life of anasset. The remaining life is three years Depreciation for the will be calculated to Rs 23,333 Depreciation expense(Dr)23,333 Accumulated Depreciation (Cr.) 23,333 Then incremental depreciation would be separated i.ethe depreciation charge on revaluation It is Rs. 7,708. Surplus on revaluation (Dr) 7,708 Equity (Cr) 7,708