On June 30, 2023, Flakes reported the following information: Equipment at cost 30,000,000 Accumulated depreciation 10,500,000 The equipment was measured using the cost model and depreciated on a straight line basis over 10-year period. On Dec. 31, 2023, the management decided to change the basis of measurement from the cost model to the revaluation model. The equipment was revalued at the fair value of P27,000,000 with no change in useful life. The income tax rate is 30%. 1) What is the revaluation surplus on December 31, 2024? A . 6,300,000 B. 9,000,000 C. 5,250,000 D. 5,670,000 2) What is the depreciation for 2024? A . 4,500,000 B. 2,700,000 C. 3,000,000 D. 1,500,000 3) What is deferred tax liability on December 31, 2024? A . 2,700,000 B. 2,250,000 C. 1,350,000 D. 2
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.
On June 30, 2023, Flakes reported the following information:
Equipment at cost 30,000,000
Accumulated
The equipment was measured using the cost model and depreciated on a straight line basis over 10-year
period. On Dec. 31, 2023, the management decided to change the basis of measurement from the cost model
to the revaluation model. The equipment was revalued at the fair value of P27,000,000 with no change in
useful life. The income tax rate is 30%.
1) What is the revaluation surplus on December 31, 2024?
A
.
6,300,000 B. 9,000,000 C. 5,250,000 D. 5,670,000
2) What is the depreciation for 2024?
A
.
4,500,000 B. 2,700,000 C. 3,000,000 D. 1,500,000
3) What is
A
.
2,700,000 B. 2,250,000 C. 1,350,000 D. 2,500,000
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