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Hello Chris / FR tutor,
I need help on this question below please
Crinkle Co bought an asset for $10,000 at the beginning of 20×6. It had a useful life of five years. On 1 January 20×8 the asset was revalued at $12,000. The expected useful life has remained unchanged (ie three years remaining )
On 1 January 20×8 the carrying value of the asset is $10,000 – ( 2 x $10,000 / 5) =$6,000
I don’t understand why it’s (2 x $10,000) this is the part I need help with why was the asset multiplied by 2.Thank you
Hi,
The asset was purchase at the start of 20X6 and then revalued two years later at the start of 20X8. There will therefore have been two year’s worth of depreciation charged since the date the asset was purchased.
Thanks
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