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Revaluation and depreciation question

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › Revaluation and depreciation question

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by f6ali.
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  • May 21, 2020 at 10:02 pm #571527
    karam04
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    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 )

    Account for the revaluation and state the treatment for depreciation from 20×8 onwards.

    Solution

    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)

    Please could somebody help ? Thank you

    May 23, 2020 at 1:41 pm #571658
    f6ali
    Member
    • Topics: 10
    • Replies: 342
    • ☆☆☆

    The depreciation expense per annum is $2,000 ($10,000/5yrs).

    The accumulated depreciation from 20×6 to 1 Jan 20×8 (2 years) is $4,000.

    Therefore the carrying value is $6,000 ($10,000-$4,000).

    Hope this helps.

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