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1. Fill in the appropriate blanks (with gray highlight).

2. Be able to define, identify, and understand the following terms upon completion of the activity:
a. Revalued amount
b. Fair Value
c. Depreciated Replacement cost
d. Replacement cost
e. Carrying amount
f. Revaluation surplus
g. Appreciation or revaluation increase
h. Piecemeal realization
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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
Amount
Required:
1. Appreciation or revaluation increase 3,000,000
2. Carrying amount 6,000,000
3. Depreciated Replacement cost 8,400,000
4. Revaluation surplus 2,400,000
5. What is the original useful life of the asset? 30 years
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

ANSWER (6,7,8)
ACCOUNT TITLE Dr. Cr.
6. Machinery 3,000,000
Accumulated depreciation 600,000
Revaluation surplus 2,400,000

7. Depreciation Expense (8,400,000/24) 350,000

Accumulated depreciation 350,000
30 original life - 6 age of asset = 24 yrs.

8. Revaluation surplus (2,400,000/24) 100,000

Retained earnings 100,000
Solution
Cost Replacement cost Appreciation
Machinery P7,500,000 10,500,000 3,000,000
Accumulated Depreciation 1,500,000 2,100,000 600,000
CA/SV/RS 6,000,000 8,400,000 2,400,000

Other solutions: (if necessary)