Gray Ltd purchased a machine on 1 April 20X2 for GHS 16,000. In the years ended 31 March 20X3 and 31 March 20X4, Gray Ltd depreciated the machine at 25% per annum on a straight-line basis. On April 20X4, the machine was revalued to GHS 12,000 with its estimated useful life being unchanged. In accordance with IAS 16 Property, Plant and Equipment, what was the effect of this revaluation on Gray Ltd’s profit for the year ended 31 March 20X5? A An increase of GHS 1,000B An increase of GHS 2,000C A decrease of GHS 1,000D A decrease of GHS 2,000

Ans. Cost of the machine = GHS 16000 Depreciation @ 25% for 2003= 4000 Depreciation @ 25%…

Answered: Gray Ltd purchased a machine on 1 April…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Gray Ltd purchased a machine on 1 April 20X2 for GHS 16,000. In the years ended 31 March 20X3 and 31 March 20X4, Gray Ltd depreciated the machine at 25% per annum on a straight-line basis. On April 20X4, the machine was revalued to GHS 12,000 with its estimated useful life being unchanged.

In accordance with IAS 16 Property, Plant and Equipment, what was the effect of this revaluation on Gray Ltd’s profit for the year ended 31 March 20X5?

A An increase of GHS 1,000

B An increase of GHS 2,000

C A decrease of GHS 1,000

D A decrease of GHS 2,000

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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

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