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
Author
Posts
Viewing 2 posts - 1 through 2 (of 2 total)
You must be logged in to reply to this topic.
Cookies
We serve cookies. If you think that's ok, just click "Accept all". You can also choose what kind of cookies you want by clicking "Settings". Read our cookie policy