Corvette the leading car manufacturing company acquired amachine for Rs.125,000

Question

Corvette the leading car manufacturing company acquired amachine for Rs.125,000 on Jan 1,2004: estimated life was 8 years.Depreciation is charged on straightline method.On Jan1,2009:the machine was revalued atrs.70,000.Apart from recording revaluation entry, no otherentries have been passed. Required:Calculate the value of depreciation expense and passjournal entry in accordance with IAS(International accountingstandard)-16 Corvette the leading car manufacturing company acquired amachine for Rs.125,000 on Jan 1,2004: estimated life was 8 years.Depreciation is charged on straightline method.On Jan1,2009:the machine was revalued atrs.70,000.Apart from recording revaluation entry, no otherentries have been passed. Required:Calculate the value of depreciation expense and passjournal entry in accordance with IAS(International accountingstandard)-16

Explanation / Answer

Had there been no change in theestimate of useful life of an asset. The remaining life is threeyears 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.e thedepreciation charge on revaluation It is Rs. 7,708. Surplus on revaluation (Dr) 7,708 Equity (Cr) 7,708 Assuming the year end December 31

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