Corvette the leading car manufacturing company acquired amachine for Rs.125,000
ID: 2447632 • Letter: C
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 straight line method. On Jan 1, 2009:the machine was revalued at Rs.70,000.Apart from recordingrevaluation entry, no other entries have been passed
Required: Calculate the value of depreciation expense and passjournal entry in accordance with IAS-16
Calculate the value of revaluation surplus and pass journal entryin accordance with IAS-16
Explanation / Answer
Depreciation Expense $15625 ea yr AccumDepr $15625 ea yr for 5 years Total depreciation at time of revaluation is $78125 Deduct from original cost of $125,000 = new book value $46,875 at time of revalue if a revaluation results in an increase in value, it should becredited to other comprehensive income and accumulatedin equity under the heading "revaluation surplus" value $70,000 less $46,875 = $23,125 surplus Hope this helps