I have read in my Kaplan book that if an asset is revalued, the whole charge of depreciation must go to income statement. So I would like to confirm something:
Example: An asset having carrying value of $50000 on the 1 January 2009 and residual life of 20 yrs is revalued on the 30 June 2009 as $75000 and residual life is expected to remain the same. Calculate depreciation for the year ended 31 December 2009.
Answer: Depreciation for the year = 75000/20=$3750 OR Depreciation for the year = (50000/20 * 6/12) + (75000/20 * 6/12) = $ 3125….PLEASE HELP, I AM REALY CONFUSED!!!!!!
Your second answer appears to be closer. the ONLY reservation I have is whether the statement “residual life is expected to remain the same” means that, at date of revaluation there is now only 19.5 years of remaining useful life
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