Turkish Angora Company provided the following information on January 1, 2017 relating to property, plant and equipment. Land 30,000,000 Building 300,000,000 Accumulated depreciation – building 37,500,000 There were no additions or disposal during 2017. Depreciation is computed using straight line over 20 years for building. On June 30, 2017, all of the property, plant and equipment were revaluated as follows: Replacement cost Sound value Land 40,000,000 40,000,000 Building 500,000,000 ? Ignoring income tax, what is the revaluation surplus on December 31, 2017? A . 160,000,000 B. 170,000,000 C. 180,000,000 D.
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.
Turkish Angora Company provided the following information on January 1, 2017 relating to property, plant
and equipment. Land 30,000,000
Building 300,000,000
There were no additions or disposal during 2017. Depreciation is computed using straight line over 20
years for building. On June 30, 2017, all of the property, plant and equipment were revaluated as follows:
Replacement cost Sound value
Land 40,000,000 40,000,000
Building 500,000,000 ?
Ignoring income tax, what is the revaluation surplus on December 31, 2017?
A
.
160,000,000 B. 170,000,000 C. 180,000,000 D. 175,000,000
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