Reference no: EM132588380

Entity A acquires equipment on 1/1/20x1, information on costs is as follows:

Purchase price, gross of P10,000 trade discount      800,000

Non-refundable purchase taxes                              20,000

Delivery and handling costs                                  40,000

Installation costs                                                30,000

Present value of decommissioning and restoration costs 10,000

Question 1: Assume the equipment has a useful life of 10 years and a residual value of P90,000. Entity A uses the straight-line method of depreciation. On December 31, 20x2, Entity A revalues the equipment at a fair value of P820,000. There is no change in the residual value and the remaining useful life of the asset. How much are the revaluation surplus on December 31, 20x2 and revised depreciation expense in 20x3 and in subsequent periods, respectively?

a. Revaluation surplus - P92,000; Revised annual depreciation - P92,150

b. Answer not given

c. Revaluation surplus - P90,000; Revised annual depreciation - P91,250

d. Revaluation surplus - P89,000; Revised annual depreciation - P91,050