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acct1511 2010s2w04 HomeQ

# acct1511 2010s2w04 HomeQ - Cr Revaluation Reserve...

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ACCT1511 Suggested solutions to homework questions – Week 4 Problem 9.27 1. (i) \$4,000; (ii) \$3,050; (iii) \$5,000; (iv) 0 2. (i) \$60,000 – (2*4000) = \$52,000; (ii) \$36,600 – (2*3050) = \$30,500; (iii) 35,000 – (2*5000) = \$25,000; (iv) \$90,000 (assuming Higgins Ltd did not impair any of its intangible assets). 3. Carrying amount on 1 July 2010 = \$36,600 - \$3,050 = \$33,550 Impairment loss = \$33,550 - \$17,500 = \$16,050

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Homework Question: Comparison between cost and revaluation method Land Cost Method (AASB116/136) Revaluation Method (AASB116) Recorded Value Journal Entry Recorded Value Journal Entry Y 0 Buy for \$100,000 \$100,000 Dr Land \$100,000 CR Cash \$100,000 \$100,000 Dr Land \$100,000 CR Cash \$100,000 Y 1 Market value: \$150,000 \$100,000 \$150,000 Dr Land \$50,000
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Unformatted text preview: Cr Revaluation Reserve \$50,000 (OCI) Y 2 Market value: \$120,000 \$100,000 \$120,000 Dr Revaluation Reserve \$30,000 (OCI) Cr Land \$30,000 Y 3 Market value: \$75,000 \$75,000 Dr Loss on impairment of Land \$25,000 Cr Allowance for impairment \$25,000 \$75,000 Dr Loss on devaluation of Land \$25,000 (Income) Dr Revaluation Reserve \$20,000 (OCI) Cr Land \$45,000 Y 4 Market value: \$100,000 \$100,000 \$75,000 Dr Allowance for impairment \$25,000 Cr Gain on re-evaluation of Land \$25,000 OR Do nothing \$100,000 Dr Land \$25,000 Cr Gain on revaluation of Land \$25,000 (Income) OCI= Other comprehensive income (AASB101) Note: new terminology: Revaluation Reserve instead of Asset Revaluation Reserve. Special thanks to Brian Booth for his technical expertise....
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