Scribd
Upload
1K views3 pages

Revaluation

1. The company revalued a machinery asset with a replacement cost of P10.5 million and original cost of P7.5 million. 2. This resulted in an appreciation of P3 million, increasing the carrying amount to P6 million and creating a revaluation surplus of P2.4 million. 3. Annual depreciation is calculated on the revalued amount of P8.4 million over the remaining useful life of 24 years.

Uploaded by

Jerbert Jesalva
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
1K views3 pages

Revaluation

1. The company revalued a machinery asset with a replacement cost of P10.5 million and original cost of P7.5 million. 2. This resulted in an appreciation of P3 million, increasing the carrying amount to P6 million and creating a revaluation surplus of P2.4 million. 3. Annual depreciation is calculated on the revalued amount of P8.4 million over the remaining useful life of 24 years.

Uploaded by

Jerbert Jesalva
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Instructions: (Please hide this cell before you save and submit this activity)

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
3. Always keep safe. If there are any reasonable delays of submission of any activities, just inform me (thru messenger). I fully
understand your situation; and I really appreciate your determination to submit despite encountering various difficulties (e.g.
slow internet connections, walang pangload, brownout etc.).

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)

You might also like