PIA ELAINE A. MIRABALLES BSA-2A
A2.4 - Revaluation
On January 1, 2018, the following data was gathered regarding revaluation of the equipment:
Cost
Equipment 8,000,000
Accumulated Depreciation 4,500,000
Age of asset 9 years
Fair Value 6,125,000
On January 2, 2019 the equipment was sold for 5,500,000 cash.
Required: Fill-out the table below and prepare the journal entries for 2018 and the sale in 2019
using (present necessary solutions):
a. Proportional method
b. Elimination method
Cost Replacement Cost Appreciation
(RC-Cost)
Equipment 8,000,000 14,000,000 6,000,000
Accumulated
Depreciation
(4.5M/8M= 0.5625 or
56.25%)
4,500,000 7,875,000 3,375,000
CA/FV/RS 3,500,000 6,125,000 2,625,000
The asset is 56.25% depreciated. If the age of asset is 9 years, thus, the useful life of the asset is
16 years (9 years /56.25%). Therefore, the remaining useful life is 7 years.
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