roblem 31-16 (IFRS) January 1, 2022, World Company reported the following formation: ilding at cost cumulated depreciation e building was measured using the cost model and preciated on a straight line basis over 10-year period. January 1, 2022, the management decided to change the basis measurement from the cost model to the revaluation model. e equipment was revalued at the fair value of P27,000,000 th no change in useful life. 30,000,000 12,000,000 What amount should be reported as pretax revaluation surplus on December 31, 2022? a. 12,500,000 b. 15,000,000 C. c. d. 7,500,000 9,000,000 What amount should be recorded as depreciation for 2022? a. 4,500,000 b. 2,700,000 c. 3,000,000 d. 1,500,000
roblem 31-16 (IFRS) January 1, 2022, World Company reported the following formation: ilding at cost cumulated depreciation e building was measured using the cost model and preciated on a straight line basis over 10-year period. January 1, 2022, the management decided to change the basis measurement from the cost model to the revaluation model. e equipment was revalued at the fair value of P27,000,000 th no change in useful life. 30,000,000 12,000,000 What amount should be reported as pretax revaluation surplus on December 31, 2022? a. 12,500,000 b. 15,000,000 C. c. d. 7,500,000 9,000,000 What amount should be recorded as depreciation for 2022? a. 4,500,000 b. 2,700,000 c. 3,000,000 d. 1,500,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Problem 31-16 (IFRS)
On January 1, 2022, World Company reported the following
information:
Building at cost
Accumulated depreciation
The building was measured using the cost model and
depreciated on a straight line basis over 10-year period.
30,000,000
12,000,000
On January 1, 2022, the management decided to change the basis
of measurement from the cost model to the revaluation model.
The equipment was revalued at the fair value of P27,000,000
with no change in useful life.
1. What amount should be reported as pretax revaluation
surplus on December 31, 2022?
a. 12,500,000
b. 15,000,000
C.
7,500,000
d. 9,000,000
2. What amount should be recorded as depreciation for 2022?
a. 4,500,000
b. 2,700,000
C. 3,000,000
d. 1,500,000
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