PPE.pptx

# However the decrease shall be recognised in other

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However, the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus.

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Question 1. An asset’s carrying amount in the balance sheet is currently Rs 50,000. Company carried out revaluation and realised that it’s fair value is 45000 Rs, How should this change in value be treated? Next year it carried out Revaluation and realised that the value is 40,000 Rs 52,000 Rs 2. An asset’s carrying amount in the balance sheet is currently Rs 50,000. Company carried out revaluation and realised that it’s fair value is 45000 Rs, How should this change in value be treated? Next year it carried out Revaluation and realised that the value is 45,000 Rs 58,000 Rs
Treatment of increase and decrease in the value of the asset arising out of revaluation Carrying amount Rs 50,000 FV: Rs 45,000 (5000) SOPL FV: Rs 40,000 (5000) SOPL FV: Rs 52,000 5000 SOPL 2000 OCI FV: Rs 55,000 5000 OCI FV: 45,000 (5000) OCI (5000) SOPL FV:58000 3000 OCI

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Compute the cost recorded for this machine. (Rizio pays for this machine within the cash discount period.) Invoice price \$12,500 Cash discount (\$12,500 x 2%) (250) Net purchase price 12,250 Freight 360 Mounting 895 Assembly 475 Normal adjustments 40 Machine cost \$14,020 Rizio Co. purchases a machine for \$12,500, terms 2/10, n/60, FOB shipping point. The seller prepaid the \$360 freight charges, adding the amount to the invoice and bringing its total to \$12,860. The machine requires special steel mounting and power connections costing \$895. Another \$475 is paid to assemble the machine and get it into operation. In moving the machine to its steel mounting, \$180 in damages occurred. Materials costing \$40 are used in adjusting the machine to produce a satisfactory product. The adjustments are normal for this machine and are not the result of the damages. Exercise 8-1
Depreciation

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Depreciation Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately.
Depreciable amount & period The depreciable amount of an asset shall be allocated on a systematic basis over its useful life. The residual value and the useful life of an asset shall be reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change(s) shall be accounted for as a change in an accounting estimate

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Depreciation method The depreciation method used shall reflect the pattern in
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