Reference no: EM132978063
Questions -
Q1. DAS Inc. decided to revalue its machine on December 31, 2019, and determined that the current replacement cost is 1,500,000. The machine, which was purchased last January 1, 2017 for 1,000,000, has a carrying value of 400,000. The entity has been consistent in depreciating its machine using the straight-line method. On September 1, 2021, the entity sold the machine for 140,000.
A) How much is the revaluation surplus as of December 31, 2019 after revaluation?
B) How much is the revaluation surplus as of December 31, 2020?
C) How much is the gain(loss) from disposal?
Q2. CSE Company and BSA Inc. decided to exchange machineries on January 1, 2019. The machine of CSE (Machine C) was purchased in January 1, 2016 for 1,000,000. The estimated useful life of the machine is 10 years, with no residual value. On the date of the exchange, Machine C's fair value is 680,000. BSA's machine (Machine B) was purchased on January 1, 2018, for 2,500,000. The estimated useful life of the machine is 5 years, with no residual value. The fair value of Machine H on the date of exchange is 2,100,000. Because of the difference in the fair values, included in the agreement is a stipulation wherein CSE shall pay 1,500,000. The exchange is considered to be with commercial substance.
A) How much is the gain (loss) from exchange that should be recognized by CSE Company?
B) How much shall BSA Inc. initially recognize Machine C?
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