As at 1 Sep 2021, Charly Ltd has an item of machinery that originally cost $50 000
Question:
As at 1 Sep 2021, Charly Ltd has an item of machinery that originally cost $50 000 and has accumulated depreciation of $25 000. Its remaining life is assessed to be four years, after which time it will have a residual value of $1000. Charly decided on 1 Sep 2021that the item should be revalued to its current fair value, which was assessed as $65 000.
Required:
Compute the total revaluation increment which is the difference between the carrying amount and the fair value?
Record the journal entries on 1 Sep 2021 to recognize the revaluation surplus?
What effect will an asset revaluation have on subsequent periods’ profits? Explain your answer
Applying International Financial Reporting Standards
ISBN: 978-0730302124
3rd edition
Authors: Keith Alfredson, Ken Leo, Ruth Picker, Paul Pacter, Jennie Radford Victoria Wise