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    Kyle Pereira
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    1) The document contains multiple problems related to accounting for revaluation of assets. It provides original costs and accumulated depreciation of assets, as well as their revalued amounts. 2) It demonstrates calculations of revaluation surplus or deficit using the proportional and elimination approaches. Under proportional, the surplus is allocated based on the proportion of remaining life. Under elimination, accumulated depreciation is eliminated against the revaluation surplus. 3) The problems show journal entries to record depreciation expense and allocation of revaluation surplus to retained earnings under both the proportional and elimination methods.

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    1) The document contains multiple problems related to accounting for revaluation of assets. It provides original costs and accumulated depreciation of assets, as well as their revalued amounts. 2) It demonstrates calculations of revaluation surplus or deficit using the proportional and elimination approaches. Under proportional, the surplus is allocated based on the proportion of remaining life. Under elimination, accumulated depreciation is eliminated against the revaluation surplus. 3) The problems show journal entries to record depreciation expense and allocation of revaluation surplus to retained earnings under both the proportional and elimination methods.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    25 views14 pages

    Revaluation and Impairment

    Uploaded by

    Kyle Pereira
    1) The document contains multiple problems related to accounting for revaluation of assets. It provides original costs and accumulated depreciation of assets, as well as their revalued amounts. 2) It demonstrates calculations of revaluation surplus or deficit using the proportional and elimination approaches. Under proportional, the surplus is allocated based on the proportion of remaining life. Under elimination, accumulated depreciation is eliminated against the revaluation surplus. 3) The problems show journal entries to record depreciation expense and allocation of revaluation surplus to retained earnings under both the proportional and elimination methods.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 14

    Problem 31-1

    1) Annual Depreciation 900,000.00


    3

    annual dep expense 300,000.00

    Original Life of the asset Original cost of the asset


    Annual depreciation

    4,500,000.00
    300,000.00

    15

    2) Cost Revaluation Appreciation


    Machinery 4,500,000.00 7,200,000.00 2,700,000.00
    Accum. Dep. 900,000.00 1,440,000.00 540,000.00
    CV/SV/RS 3,600,000.00 5,760,000.00 2,160,000.00

    Machinery 2,700,000.00
    Accumulated Depreciation 540,000.00
    Revaluation Surplus 2,160,000.00

    3) Based on Sound Value/remaining useful life = 480,000.00

    Depreciation Expense 480,000.00


    Accumulated Depreciation 480,000.00

    4) Revaluation Surplus 180,000.00


    Retained earnings 180,000.00

    Problem 31-2

    1) Annual Depreciation 750,000.00


    5

    depreciation expense 150,000.00

    Original Life of the asset Original cost of the asset


    Annual depreciation

    3,000,000.00
    150,000.00
    20

    2) Cost Revaluation Appreciation


    Equipment 3,000,000.00 4,800,000.00 1,800,000.00
    Accum. Dep. 750,000.00 1,200,000.00 450,000.00
    CV/SV/RS 2,250,000.00 3,600,000.00 1,350,000.00

    Machinery 1,800,000.00
    Accumulated Depreciation 450,000.00
    Revaluation Surplus 1,350,000.00

    3) Based on Sound Value/remaining useful life = 240,000.00

    Depreciation Expense 240,000.00


    Accumulated Depreciation 240,000.00

    4) Revaluation Surplus 90,000.00


    Retained earnings 90,000.00

    Proportional App

    1) Cost Revaluation
    Building 5,000,000.00 8,000,000.00
    Accum. Dep. 1,250,000.00 2,000,000.00
    CV/SV/RS 3,750,000.00 6,000,000.00

    8,000,000.00

    40-10 = 30 YEARS 30 YEARS


    40 YEARS

    75%
    Building 3,000,000.00
    Accum Depreciation 750,000.00
    Revaluation Surplus 2,250,000.00

    Elimination App
    1) Accumulated Depreciation 1,250,000.00
    Buidling

    Building 2,250,000.00
    Revaluation Surplus

    1)
    Cost Revaluation
    Equipment 6,500,000.00 9,200,000.00
    Less: Residual value 200,000.00 200,000.00
    Depreciable Amount 6,300,000.00 9,000,000.00
    Less: Accumulated Dep. 1,000,000.00 1,500,000.00
    CV/SV/RS 5,300,000.00 7,500,000.00

    Equipment 2,700,000.00
    Accum. Dep. 500,000.00
    Revaluation Surplus 2,200,000.00

    2) Cash 8,000,000.00
    Accum. Dep. 2,250,000.00
    Equipment 9,200,000.00
    Gain on Sale of equipmen 1,050,000.00

    Revaluation Surplus 1,980,000.00


    Retained Earnings 1,980,000.00

    Cost Revaluation Appreciation


    Building 20,000,000.00 30,000,000.00 10,000,000.00
    Less: Residual value 4,000,000.00 4,000,000.00 -
    Depreciable Amount 16,000,000.00 26,000,000.00 10,000,000.00
    Less: Accumulated Dep. 9,000,000.00 13,000,000.00 4,000,000.00
    CV/SV/RS 7,000,000.00 13,000,000.00 6,000,000.00

    1) Equipment 10,000,000.00 2)
    Accum. Dep. 4,000,000.00
    Revaluation Surplus 6,000,000.00

    6 years -3 years = 3 years 3)


    TOTAL 5 Years
    8 years - 6 years - 2 years
    years

    Original cost of the asset


    Annual depreciation

    years

    years

    Original cost of the asset


    Annual depreciation
    years

    Proportional Approach

    Appreciation
    3,000,000.00 2) Depreciation 200,000.00
    750,000.00 Accumulated Depreciation 200,000.00
    2,250,000.00
    3) Revaluation Surplus 75,000.00
    Retained Earnings 75,000.00
    Elimination Approach
    2) Depreciation 200,000.00
    1,250,000.00 Accumulated Depreciation 200,000.00

    3) Revaluation Surplus 75,000.00


    2,250,000.00 Retained Earnings 75,000.00

    Appreciation
    2,700,000.00
    -
    2,700,000.00
    500,000.00
    2,200,000.00

    Depreciation 750,000.00
    Accum. Dep. 750,000.00

    Revaluation Surplus 220,000.00


    Retained Earnings 220,000.00

    Depreciation 1,200,000.00
    Accum. Dep. 1,200,000.00
    Revaluation Surplus 1,200,000.00
    Retained Earnings 1,200,000.00

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