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Question - As at 1 July 2019, Farrelly Ltd has an item of machinery that originally cost $50 000 and has accumulated depreciation of $25 000. Its remaining life is assessed to be five years, after which time it will have no residual value. Farrelly decided on 1 July 2019 that the item should be revalued to its current fair value, which was assessed as $55 000.
Compute the total revaluation increment which is the difference between the carrying amount and the fair value.
Record the journal entries on 1 July 2019 to recognize the revaluation surplus.
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