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 All Forums  The Profession  Accounting and Audit  Revaluation surplus journal entry? New Topic  Topic Locked  Printer Friendly
Author  Topic

kashif187
Unregistered Trainee

1 Posts

 Posted - Oct 28 2009 :  12:07:22 PM Corvette the leading car manufacturing company acquired a machine 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 recording revaluation entry, no other entries have been passedRequired: Calculate the value of depreciation expense and pass journal entry in accordance with IAS-16 Calculate the value of revaluation surplus and pass journal entry in accordance with IAS-16

hmmm
Junior

Pakistan
101 Posts

 Posted - Oct 28 2009 :  7:35:35 PM 125000/8=15625 depreciation per yeardepreciation for 3 years = 15625*3=46875WDV after 3 years = 125000-46875 = 78125revalued value = 70000difference = 78125 - 70000 = 8125 8125 should be charged to p&l a/c if it is first time revalued no revaluation surpluse account already exist. firstly charged the accumulated depreciation to asset dr acumulated depcr assetnow dr p&l a/ccr assetclosing balance of the asset should be 70000

skystar
Unregistered Trainee

Pakistan
22 Posts

 Posted - Oct 29 2009 :  9:47:06 PM quote:Originally posted by kashif187Corvette the leading car manufacturing company acquired a machine 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 recording revaluation entry, no other entries have been passedRequired: Calculate the value of depreciation expense and pass journal entry in accordance with IAS-16 Calculate the value of revaluation surplus and pass journal entry in accordance with IAS-16

skystar
Unregistered Trainee

Pakistan
22 Posts

 Posted - Oct 29 2009 :  10:05:05 PM quote:Originally posted by kashif187Corvette the leading car manufacturing company acquired a machine 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 recording revaluation entry, no other entries have been passedRequired: Calculate the value of depreciation expense and pass journal entry in accordance with IAS-16 Calculate the value of revaluation surplus and pass journal entry in accordance with IAS-16

farazkpmg
Unregistered Trainee

Pakistan
10 Posts

 Posted - Oct 30 2009 :  1:47:30 PM Boss its of 6 year not for 3 year working...

hmmm
Junior

Pakistan
101 Posts

 Posted - Nov 01 2009 :  2:57:08 PM ok big boss. u can also solve

Arabian
Unregistered Trainee

Pakistan
20 Posts

 Posted - Nov 03 2009 :  2:39:19 PM 125000/8=15625 depreciation per yeardepreciation for 5 years = 15625*5=78125WDV after 3 years = 125000-78125 = 46875revalued value = 70000difference = 70000-46875 = 23125 Asset 23125 Dr.Revaluation surplus 23125 Cr. Edited by - Arabian on Nov 03 2009 2:40:50 PM

hmmm
Junior

Pakistan
101 Posts

 Posted - Nov 04 2009 :  5:53:13 PM revaluation surpluls at the end will be transferred to retained earingwhat will be the effect of deferred tax?tax base of revaluation surplus is zero.deferred tax asset created for the diffirence. I have read the book of Kamran but that is confusing. can anyone explian it in detail?mean what entry will be pass for deferred tax

irfan kazim
Junior

Pakistan
94 Posts

 Posted - Nov 12 2009 :  11:47:20 AM You are all boss. Working. 125000/8=15625previous 5 year depreciation= 15625*5=78125 WBV 125000-78125= 46875 Revaluation surplus 70000-46875=23125 Journal entry at the first date of Jan 2009 Accumulated depreciation a/c 78125 Assets a/c 78125 At the year end Depreciation a/c 23333 accumulated depreciation 23333workings 70000/3=23333Revaluation surplus Assets a/c 23125 Revaluation surplus 23125Excess depreciation due to revaluation adjusted revaluation a/c 7708 retained earnings 7708 workings 23125/3=7708 or 23333-15625= 7708Excess amount of depreciation is transfered to retained earning account instead whole revaluation surplus amount will be transfered to retained earning account.
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