Co D acquires a plant for £600.000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years. On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluation model. The plant was sold on 1 Jan 2022 for £470.000. Co D's year end is 31 Dec. Required: A. Clearly show cost, accumulated depreciation and carrying value of the plant as of 1 Jan 2011 before revaluation. Show accounting entries on 1 Jan 2021 when plant is revalued. B-Show accounting entries on disposal of the plant on 1 Jan 2022.
Co D acquires a plant for £600.000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years. On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluation model. The plant was sold on 1 Jan 2022 for £470.000. Co D's year end is 31 Dec. Required: A. Clearly show cost, accumulated depreciation and carrying value of the plant as of 1 Jan 2011 before revaluation. Show accounting entries on 1 Jan 2021 when plant is revalued. B-Show accounting entries on disposal of the plant on 1 Jan 2022.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 14P: Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used...
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
100%
Co D acquires a plant for £600.000 on 1 Jan 2016. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 15 years.
On 1 Jan 2021, the company revalues the machinery to be £480,000 using revaluation model.
The plant was sold on 1 Jan 2022 for £470.000.
Co D's year end is 31 Dec.
Required:
A. Clearly show cost, accumulated depreciation and carrying value of the plant as of 1 Jan 2011 before revaluation. Show accounting entries on 1 Jan 2021 when plant is revalued.
B-Show accounting entries on disposal of the plant on 1 Jan 2022.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning