PT Silver King uses a revaluation model for one class of equipment it uses for its gold cane production business. This tool was purchased on January 2, 2021 for $500,000 and has a useful life of 10 years with no salvage value. PT Silver King has the following information related to this instrument (assuming that the useful life and salvage value of the instrument does not change during the period of information presented below). Dates Fair Value $500,000 2 January 2021 31 December 2021 $468,000 31 December 2022 $380,000 31 December 2023 $355,000 Instructions: a. Prepare the required entries on December 31, 2021, 2022, and 2023 if the company uses: 1. Cost model; and 2. Revaluation model

PT Silver King uses a revaluation model for one class of equipment it uses for its gold cane production business. This tool was purchased on January 2, 2021 for $500,000 and has a useful life of 10 years with no salvage value. PT Silver King has the following information related to this instrument (assuming that the useful life and salvage value of the instrument does not change during the period of information presented below). Dates Fair Value $500,000 2 January 2021 31 December 2021 $468,000 31 December 2022 $380,000 31 December 2023 $355,000 Instructions: a. Prepare the required entries on December 31, 2021, 2022, and 2023 if the company uses: 1. Cost model; and 2. Revaluation model

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Description: PT Silver King uses a revaluation model for one class of equipment it uses for its gold cane productionbusiness. This tool was purchased on January 2, 2021 for $500,000 and has a useful life of 10 yearswith no salvage value. PT Silver King has the f

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

PT Silver King uses a revaluation model for one class of equipment it uses for its gold cane production
business. This tool was purchased on January 2, 2021 for $500,000 and has a useful life of 10 years
with no salvage value. PT Silver King has the following information related to this instrument (assuming
that the useful life and salvage value of the instrument does not change during the period of
information presented below).
Dates
Fair Value
2 January 2021
$500,000
31 December 2021
$468,000
31 December 2022
$380,000
31 December 2023
$355,000
Instructions:
a. Prepare the required entries on December 31, 2021, 2022, and 2023 if the company uses:
1. Cost model; and
2. Revaluation model
b. Determine the amount that PT Silver King must report on December 31, 2021, 2022 and 2023 for the
accounts: Equipment, Accumulated Depreciation, Revaluation Surplus, Depreciation Expense, and Loss
on Impairment when using:
1. Cost model; and
2. Revaluation model!
c. Journalize the sale of this equipment by PT Silver King on January 2, 2024 for $330,000

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