CHAPTER 21

NON-CURRENT ASSETS: REVALUATION, DISPOSAL AND

OTHER ASPECTS

EXERCISE SOLUTIONS
Exercise 21 .1 Revaluations (increase and decrease)

2013
1 July Accumulated Depreciation – Machinery 100 000
Expense on Revaluation of Machinery (P/L) 15 000
Machinery 115 000
Revaluation decrease on machinery

1 July Accumulated Depreciation – Buildings 120 000

Buildings 100 000
Gain on Revaluation – Buildings 20 000
(OCI)
Revaluation increase on buildings

Closing entries (extract)

2014
30 June Gain on Revaluation – Buildings (OCI) 20 000
Other Comprehensive Income Summary 20 000
Transfer of OCI gain

30 June Other Comprehensive Income Summary 20 000

Revaluation Surplus 20 000
Transfer of OCI to revaluation surplus

30 June Profit or Loss Summary 15 000

Expense on Revaluation of Machinery (P/L) 15 000
Transfer of expense

30 June Retained Earnings 15 000

Profit or Loss Summary 15 000
Transfer of revaluation decrease
Exercise 21.2 Derecognition of assets
 2013
2 Jan. Accumulated Depreciation – Machinery 9 600
Machinery 9 600
Disposal of machine 1.

Accumulated Depreciation – Machinery 13 500

Loss on Disposal of Machinery 2 400
Machinery 15 000
Cash at Bank 900
Disposal of machine 2.

1 Apr. Depreciation Expense – Machinery 2 000

Accumulated Depreciation – Machinery 2 000
($28 000/3.5 years = $8 000 per year x 3/12)
Depreciation to date of disposal.

Accumulated Depreciation – Machinery 28 000

Loss of Disposal of Machinery 4 000
Machinery 32 000
Disposal of machine 3.

Problem 21.3 Revaluation, reversals and depreciation

A.
2014
31 Dec Depreciation Expense – Motor Vehicles 11 000
Accum. Depreciation – Motor Vehicles 11 000
Depreciation for half-year to 31 December 2014.

Accumulated Depreciation – Motor Vehicles 33 000

Motor Vehicles 33 000
Write back accum. depreciation against asset.

Loss on Revaluation of Vehicles (OCI) 5 000

Motor Vehicles 5 000
Reversing revaluation increase by recognising a
loss in other comprehensive income.

B.
 2015
30 Jun. Depreciation Expense – Motor Vehicles 10 000
Accum. Depreciation – Motor Vehicles 10 000
Depreciation on revalued motor vehicles.
(50 000  2.5 years x 6/12)

C.
Statement of Financial Position (Extract)
as at 30 June 2015
Motor Vehicles $50 000
Less: Accumulated Depreciation 10 000 $40 000