On January 1, 2016, Greenhills Company acquired property, plant and equipment for each as follows: Cost Life in years Land 5,000,000 25,000,000 Building 25 Machinery Equipment 10,000,000 3,000,000 10 At the beginning of 2019, a revaluation of property items was made by professionally qualified valuers. While no change in the life of the assets was indicated, it was ascertained that replacement cost of the assets acquired in 2016 had increased by the following percentage: Land 100% 80% Building Machinery Equipment 50% 40% It was authorized that such revaluation be recorded in the accounts and that depreciation be recorded on the basis of revalued amount. Required: a. Prepare journal entry to record the revaluation on January 1, 2019. b. Prepare the journal entry to record the depreciation for 2019. c. Prepare the journal entry to record the piecemeal realization of the revaluation surplus. Dunoont the assets in the statement of financial position on December 31, 2019.
On January 1, 2016, Greenhills Company acquired property, plant and equipment for each as follows: Cost Life in years Land 5,000,000 25,000,000 Building 25 Machinery Equipment 10,000,000 3,000,000 10 At the beginning of 2019, a revaluation of property items was made by professionally qualified valuers. While no change in the life of the assets was indicated, it was ascertained that replacement cost of the assets acquired in 2016 had increased by the following percentage: Land 100% 80% Building Machinery Equipment 50% 40% It was authorized that such revaluation be recorded in the accounts and that depreciation be recorded on the basis of revalued amount. Required: a. Prepare journal entry to record the revaluation on January 1, 2019. b. Prepare the journal entry to record the depreciation for 2019. c. Prepare the journal entry to record the piecemeal realization of the revaluation surplus. Dunoont the assets in the statement of financial position on December 31, 2019.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.6E
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Transcribed Image Text:On January 1, 2016, Greenhills Company acquired property, plant and equipment for each as follows:
Cost
Life in years
Land
5,000,000
25,000,000
Building
25
Machinery
Equipment
10,000,000
3,000,000
10
At the beginning of 2019, a revaluation of property items was made by professionally qualified valuers.
While no change in the life of the assets was indicated, it was ascertained that replacement cost of the
assets acquired in 2016 had increased by the following percentage:
Land
100%
80%
Building
Machinery
Equipment
50%
40%
It was authorized that such revaluation be recorded in the accounts and that depreciation be recorded on
the basis of revalued amount.
Required:
a. Prepare journal entry to record the revaluation on January 1, 2019.
b. Prepare the journal entry to record the depreciation for 2019.
c. Prepare the journal entry to record the piecemeal realization of the revaluation surplus.
d. Present the assets in the statement of financial position on December 31, 2019.
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