Reference no: EM132609259
BI owns a building which it uses as its offices, warehouse and garage. The land is carried as a separate non-current tangible asset at the reporting date. BI has a policy of regularly revaluing its non-current tangible assets. The original cost of the building in October 20X2 was $1,000,000; it was assumed to have a remaining useful life of 20 years at that date, with no residual value. The building was revalued on 30 September 20X4 by a professional valuer at $1,800,000.
BI also owns a machine, which it acquired on 1 October 20X0 for $500,000. The machine is being depreciated straight line over 10 years. The economic climate had deteriorated during 20X5, causing BI to carry out an impairment review of its assets at 30 September 20X5. BI's building was valued at a recoverable amount of $1,500,000 on 30 September 20X5 by an independent valuer. A specialist valued BI's machine at a market value of $230,000 on the same date. BI's management accountant calculated that the machine's value in use at 30 September 20X5 was $150,000
Based on the above data, answer the following questions
Question 1. How is the machine valued in the statement of financial position for the year ended 30 September 20X5?
Question 2. What amount should be credited to the revaluation reserve on 30 September 20X4 for the revaluation of the building?
Question 3. Calculate the depreciation charge for the building for the year ended 30 September 20X5.
Question 4. Calculate the depreciation charge for the building for the year ended 30 September 20X6.
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