Crinkle Co bought an asset for $10,000 at the beginning of 20x6. It had a useful life of five years. On 1 January 20x8 the asset was revalued at $12,000. The expected useful life has remained unchanged (ie three years remaining )
Account for the revaluation and state the treatment for depreciation from 20x8 onwards.
Solution
On 1 January 20x8 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)
Please could somebody help ? Thank you
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FRRevaluation and depreciation question
The depreciation expense per annum is $2,000 ($10,000/5yrs).
The accumulated depreciation from 20x6 to 1 Jan 20x8 (2 years) is $4,000.
Therefore the carrying value is $6,000 ($10,000-$4,000).
Hope this helps.
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