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Revaluation surplus journal entry?
10-28-2009, 05:07 PM,
 kashif187 Junior Member Posts: 1 Threads: 1 Joined: Oct 2009 Reputation: 0
Revaluation surplus journal entry?
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 passed

Required 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
10-29-2009, 12:35 AM,
 hmmm Member Posts: 91 Threads: 18 Joined: Jan 2009 Reputation: 0

125000/8=15625 depreciation per year
depreciation for 3 years = 15625*3=46875

WDV after 3 years = 125000-46875 = 78125
revalued value = 70000

difference = 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 dep
cr asset

now
dr p&l a/c
cr asset

closing balance of the asset should be 70000
10-30-2009, 02:47 AM,
 skystar Junior Member Posts: 20 Threads: 17 Joined: Oct 2009 Reputation: 0

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by kashif187</i>
<br />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 passed

Required 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
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
10-30-2009, 03:05 AM,
 skystar Junior Member Posts: 20 Threads: 17 Joined: Oct 2009 Reputation: 0

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by kashif187</i>
<br />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 passed

Required 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
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
10-30-2009, 06:47 PM,
 farazkpmg Junior Member Posts: 10 Threads: 1 Joined: Aug 2009 Reputation: 0

Boss its of 6 year not for 3 year working...
11-01-2009, 07:57 PM,
 hmmm Member Posts: 91 Threads: 18 Joined: Jan 2009 Reputation: 0

ok big boss. u can also solve
11-03-2009, 07:39 PM,
 Arabian Junior Member Posts: 20 Threads: 9 Joined: Feb 2009 Reputation: 0

<font color="purple">125000/8=15625 depreciation per year
depreciation for 5 years = 15625*5=78125

WDV after 3 years = 125000-78125 = 46875
revalued value = 70000

difference = 70000-46875 = 23125

Asset 23125 Dr.
Revaluation surplus 23125 Cr.
</font id="purple">
11-04-2009, 10:53 PM,
 hmmm Member Posts: 91 Threads: 18 Joined: Jan 2009 Reputation: 0

revaluation surpluls at the end will be transferred to retained earing
what 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
11-12-2009, 04:47 PM,
 irfan kazim Member Posts: 91 Threads: 30 Joined: May 2009 Reputation: 0

You are all boss.
Working. 125000/8=15625
previous 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 23333
workings 70000/3=23333
Revaluation surplus
Assets a/c 23125
Revaluation surplus 23125

Excess depreciation due to revaluation adjusted
revaluation a/c 7708
retained earnings 7708
workings 23125/3=7708 or 23333-15625= 7708
Excess 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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