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Hi Sir,
I am having problems with the following question.
Nimoy purchased an item of heavy industrial machinery for $90,000 on 1 Oct 2005. It had an estimated useful life of 10 years and residual value of $5,000. Plant and machinery is depreciated on a straight line basis.
On Sep 2008 Nimoy revalued the industrial machine to $75,000 in accordance with a change in policy for the measurement of tangible fixed assets. Nimoy decided to undertake the annual revaluation reserve transfer.
The tax authorities do not allow depreciation as a deductible expense. Instead, tax relief is granted based on an allowable deduction of %30 of the cost of the asset in the year in which the asset is acquired followed thereafter by an annual allowable deduction of 15% calculated on a reducing balance basis. Revaluation do not affect the tax base of the asset.
The applicable rate of income tax throughout is 20%.What is the value of the industrial machine and the associated revaluation surplus in the SOFP as at 30 Sep 2009?
Well, I’ve already sent you my answer – what did you get and what options were you given to chose from?
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