XYZ Corporation purchased a building on January 1, 2023, for $5,000,000. The building has a useful life of 40 years with no residual value. The company uses the straight-line method of depreciation.
On January 1, 2025, due to a rapid change in the business environment, XYZ Corporation carried out a revaluation of the building. The fair value of the building at this time was found to be $6,000,000. The company's policy is to adjust the future depreciation to reflect the revalued amount.
On December 31, 2027, the fair value of the building is determined to be $4,500,000, and the company decides to carry out a revaluation.

Questions:
1-What is the annual depreciation expense for 2023 and 2024 before revaluation?
2-What is the carrying amount of the building on December 31, 2024, before revaluation?
3-What is the revaluation surplus on January 1, 2025?
4-What is the revised annual depreciation expense from 2025 onwards? 5What is the carrying amount of the building on December 31, 2027, before the second revaluation?
6-What is the revaluation adjustment required on December 31, 2027, and how should it be recorded?

Answer rating: 100% (QA)

1 The annual depreciation expense for 2023 and 2024 before revaluation can be calculated using the straightline method The formula for straightline depreciation is Depreciation Expense Cost Residual V... View the full answer