On June 30, 2020, Happy Corporation reported the following information: Equipment at cost Accumulated depreciation 30,000,000 10,500,000 The equipment was measured using the cost model and depreciated on a straight line basis over 10-year period. On December 31, 2020, the management decided to change the basis of measuring the equipment from the cost model to the revaluation model. The equipment was revalued to the fair value of P27,000,000 with remaining useful life of 5 years. The income tax rate is 30%. What amount should be reported as revaluation surplus on December 31, 2020?
On June 30, 2020, Happy Corporation reported the following information: Equipment at cost Accumulated depreciation 30,000,000 10,500,000 The equipment was measured using the cost model and depreciated on a straight line basis over 10-year period. On December 31, 2020, the management decided to change the basis of measuring the equipment from the cost model to the revaluation model. The equipment was revalued to the fair value of P27,000,000 with remaining useful life of 5 years. The income tax rate is 30%. What amount should be reported as revaluation surplus on December 31, 2020?
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 8MC: On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was...
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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.
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