Prepare journal entries to reflect the revaluation of asset

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Question - An asset having a cost of $200,000 and accumulated depreciation of $40,000 is revalued to $240,000 at the beginning of the year. Depreciation for the year is based on the revalued amount and the remaining useful life of eight years. Shareholders' equity, before adjusting for the above revaluation and subsequent depreciation, is as follows:

Share capital 600,000

Revaluation surplus 90,000

Capital profits reserve 170,000

Retained earnings 140,000

Total 1,000,000

Required - Prepare journal entries to reflect the revaluation of the asset and the subsequent depreciation of the revalued asset. Which of the equity accounts would be affected directly or indirectly by the revaluation?

Reference no: EM132983559

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