Reference no: EM132473363

Assume an entity has an item of plant whose current carrying amount is S200 000 (accumulated depreciation being $20 000). The asset had cost $300 000. It was revalued downwards from a carrying amount of $270 000 to $220 000, with the following accounting entry being passed:

Dr Accumulated Depreciation                            30 000

Dr Loss - Downward Revaluation of Plant (P&L)    50 000

Cr Plant                                                           80 000

Question 1: If the asset is assessed as having a fair value of S280 000, what would be the appropriate revaluation entries?
Assumption: Tax rate is 30%.

Combined entry:

Dr Accumulated Depreciation                             20 000

Dr Plant                                                         60 000

Cr Gain on Revaluation of Plant (P&L)                  50 000

Cr Asset Revaluation Surplus                              21 000

Cr Deferred Tax Liability                                      9 000