GROUP ASSIGNMENT 2: REVALUATION

Auckland purchased a machine for $60,000 on 1 January 2022 and assigned it a useful life for 15 years.
On 31 December 2022, it was revalued to $64,000 with remaining useful life being three years.
Auckland prepares financial statements ending at 31 December using IFRS and elects to revalue the
asset. The accumulated armortization is eliminated against the gross carrying amount on the
revaluation date.
Requirements
1. Show the journal entries related to this property on Jan 1, 2022, and Dec 31 of 2022, 2023,
2024, 2025, and 2026, including
• Purchase transaction,
• Depreciation, and
• Revaluation.
Remember to show your workings for any figures that are not given and the paragraphs of IAS
16 applied for each journal entry.
2. Create T-account for the following accounts: Cash, Property, Retained earnings, Revaluation
surplus, Accumulated Depreciation, Depreciation expense,
And post the above journal entries to these accounts.
3. Complete the partly balance sheet and income statement in the table below.
Requirement 1
Workings and the applied paragraphs

JOURNAL
Date Account titles DR CR
1-Jan-16 Property 10,000
Bank 10,000

31-Dec-16 Depreciation expense 2,000

Acc. Depreciation 2,000

31-Dec-17 Depreciation expense 2,000

Acc. Depreciation 2000

31-Dec-17 Acc. Depreciation 4,000

Property 5,000
Revaluation surplus 9,000

31-Dec-18 Depreciation expense 5,000

Acc. Depreciation 5,000

31-Dec-18 Revaluation surplus 3,000

R/E 3,000

31-Dec-19 Depreciation expense 5,000

Acc. Depreciation 5,000

31-Dec-19 Revaluation surplus 3,000

R/E 3,000

31-Dec-20 Depreciation expense 5,000

Acc. Depreciation 5,000

31-Dec-20 Revaluation surplus 3,000

R/E 3,000
Requirement 2
Cash Property
10,000 01/01/16 10,000
31/12/17 5,000

Retained earnings Revaluation surplus Acc. Depre. Depre. Exp.

9,000 31/12/17 2,000 31/12/16 2,000
3,000 31/12/18 3,000 2,000 31/12/17 2,000
3,000 31/12/19 3,000 31/12/17 4,000
3,000 31/12/20 3,000 5,000 31/12/18 5,000
5,000 31/12/19 5,000
5,000 31/12/20 5,000
Requirement 3

BALANCE SHEET Jan 1 2016 Dec 31 2016 Dec 31 2017 Dec 31 2017 Dec 31 2018 Dec 31 2019 Dec 31 2020
Before revaluation After revaluation
Property 100,000 100,000 10,000 15,000 15,000 15,000 15,000
(Acc. Depre.) - (2,000) (4,000) - (5,000) (10,000) (15,000)
Net book value 100,000 98,000 6,000 15,000 10,000 5,000 -
OWNER'S EQUITY
Revaluation surplus - 9,000 6,000 3,000 -

INCOME STATEMENT Dec 31 2016 Dec 31 2017 Dec 31 2017 Dec 31 2018 Dec 31 2019 Dec 31 2020
Before revaluation After revaluation
Depreciation expense (2,000) (2,000) (2,000) (5,000) (5,000) (5,000)

Comprehensive income
Gain on revaluation of property 9,000