Reference no: EM132963402

PROBLEM 1 - On Jan. 1, 2020, GHI Corporation acquired a P2,000,000 equipment which it accounts under the revaluation model. It can be used in the production line for 10 years. After use, it can be sold for P250,000. On Jan. 1, 2023, GHI is revaluing the asset. It has a sound value of P2,250,000 and a revised residual value of P500,000. If GHI uses the proportional method, what is the journal entry on Jan. 1, 2023 to record the revaluation? How much is the revaluation surplus to be recognized?

PROBLEM 2 - An equipment was acquired for P3,000,000 on Jan. 1, 2018. It is being depreciated to a salvage value of P400,000 over 10 years. It has the following revaluation details: (A) Jan. 1, 2021 - Replacement cost of P4,100,000 and remaining useful life of 7 years, (B) Jul. 1, 2026 - Replacement cost of P3,500,000 and remaining useful life of 3 years. After recording the depreciation as of Jul. 1, 2026, what is the journal entry to record the change in revaluation using the proportionate method? How much should be (debited) or credited to revaluation surplus?

PROBLEM 3 - On Jan. 1, 2015, ABC Leasing Inc. acquired a building for a total capitalizable cost of P20,000,000. It is being depreciated over 25 years to a salvage value of P4,000,000. On Jan. 1, 2021, ABC revalued the old building. Creating the same building now would cost P25,000,000. The old building can be used for 20 more years as of this date. By the end of its useful life, it can be sold for P5,000,000. How much is the revaluation surplus to be reported on the Statement of Financial Position as of Dec. 31, 2025 assuming that ABC records piecemeal realization of the Revaluation Surplus?