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Where an asset is to be revalued, the following information is relevant:
This is the end of the asset’s seventh year
Original cost $800,00
Depreciation for 7 years at 10% straight line $ 560,000
Asset to be revalued by $600,000
Estimated remaining useful life revised to 5 years.What figure shall be debited to the asset Account and what will the nxt year depreciation charge be?
answer depreciation $168000
can anyone explaining this to me?
why not 600,000/5=120,000It’s being revalued BY $600,000 not revalued TO $600,000
(and the amount debited to the asset account should be $40,000)
OK?
ok, so ie increment book value of 40,000, thus cost 800,000+40000=840,000
divide by revised 5 yr = 168000, my logic on right track right? thanks Prof Mike
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