Korbu Berhad is a snacks manufacturer. Korbu Berhad measures all of its assets using the revaluation...

 

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Korbu Berhad is a snacks manufacturer. Korbu Berhad measures all of its assets using the revaluation model. On 1 January 2019, an independent valuation of all Korbu Berhad's assets was carried out. However, the new valuations have not been incorporated into Korbu Berhad's financial statements for the year 2019. Relevant details are as per below: Aset-aset/ Assets Land (0) Buildings Machinery Carrying amount Fair value at 1 at 1 January January 2019 2019 Dikehendaki/Required: (ii) Estimated remaining useful life at 1 January 2019 RM3,200,000 RM4,000,000 RM7,624,000 RM10,000,000 40 tahun/years RM3,262,800 RM1,800,000 8 tahun/years Korbu Berhad has a revaluation surplus reserve of RM500,000 in respect of revaluations of machinery. Annual depreciation charge as at 31 December 2018 RM 86,000 RM485,200 Explain why might a company choose not to use revaluation accounting for their assets? (1 markah/mark) Prepare the necessary journal entries to record revaluation for land, building and machinery on 1 January 2019. (6 markah/marks) Korbu Berhad is a snacks manufacturer. Korbu Berhad measures all of its assets using the revaluation model. On 1 January 2019, an independent valuation of all Korbu Berhad's assets was carried out. However, the new valuations have not been incorporated into Korbu Berhad's financial statements for the year 2019. Relevant details are as per below: Aset-aset/ Assets Land (0) Buildings Machinery Carrying amount Fair value at 1 at 1 January January 2019 2019 Dikehendaki/Required: (ii) Estimated remaining useful life at 1 January 2019 RM3,200,000 RM4,000,000 RM7,624,000 RM10,000,000 40 tahun/years RM3,262,800 RM1,800,000 8 tahun/years Korbu Berhad has a revaluation surplus reserve of RM500,000 in respect of revaluations of machinery. Annual depreciation charge as at 31 December 2018 RM 86,000 RM485,200 Explain why might a company choose not to use revaluation accounting for their assets? (1 markah/mark) Prepare the necessary journal entries to record revaluation for land, building and machinery on 1 January 2019. (6 markah/marks)

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