Topic: Revaluation and Disposal On January 1, 2018, Loony Co. acquired two assets within the same...

Topic: Revaluation and Disposal

On January 1, 2018, Loony Co. acquired two assets within the same class of plant and equipment. Information on these assets is as follows:

	Cost	Useful life
Machine A	$3,000,000	5 years
Machine B	1,800,000	3 years

The machines are expected to generate benefits evenly over their useful lives. The class of plant and equipment is measure using the revaluation model.At December 31, 2018, information about the assets is as follows:

	Fair Value	Useful Life
Machine A	$2,520,000	4 years
Machine B	1,140,000	2 years

On July 1, 2019, Machine B was sold for P870,000 cash. On the same day, Loony acquired Machine C for P2,840,000 cash. Machine C has an expected useful life of 4 years.

At December 31, 2019, information on the machines is as follows:

	Fair Value	Useful Life
Machine A	$1,680,000	3 years
Machine C	2,055,000	1.5 years

1.Determine the depreciation expense for 2018.

2.Determine the revaluation surplus at the end of 2018.

3.Compute for the gain or loss on the sale of Machine B.

4.Compute for the revaluation loss to be reported on Kamagong’s profit or loss statement for the year ended December 31, 2019.

5.Compute for the depreciation in 2019.

Expert Solution

ekkarill92 answered 1 year ago

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