Reply to the below

Richard

Participant
Hi Sir,

I am getting stuck on the below.

Nimoy purchased an item of heavy industrial machinery for 90k on 1Oct X5. It had an estimate useful life of 10 years and a residual value of 5K. Plant and machinery is depreciated on a straight-line basis.

On 30 Sep X8 Nimoy revalued the industrial machine to 75K 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 cast 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. Revaluations 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? (ignore any deferred tax)

| QUOTE May 4, 2017 at 8:44 am
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MikeLittle

Keymaster
2 points:

1) why have you told me about the capital allowances?

2) you haven’t given me the reporting date

As at 30 September, 2008 the tax written down value is 38.69,

the carrying value of the asset is $75,000 and the

revaluation reserve is $12,000

Is that enough for you?

Reply – The question is for Carrying amount and RR for 30 Sep 20X9?

I had different numbers to you. Could you explain how you got there?