Two approaches in recording the revaluation

1. Proportional approach - the accumulated depreciatiom at the date of revaluation isbrestated

proportionately with the change in the gross carrying amount of the asset so that the carrying
amount of the asset after revaluation equals the revalued amount.
2. Elimination approach - the accumulated depreciatiin is eliminated against the carrying amount
of the assets and the net amount restated to the revalued amount of the asset.

38-6
Maroon Company provided the following data ln the date of revaluation:
Building, at original cost 5,000,000
Building, at fair value 6,000,000
Accumulated depreciation- cost
40-year life and 10 years expired 1,250,000

Required :
Under the "proportional approach" and "elimination approach", prepare journal entries for the
current year.

38-10
Cinema Compant had revalued a machinery at the current year-end.
Replacement cost 3,000,000
Accumulated depreciation 1,000,000
Depreciated replacement cost 2,000,000

The books were adjusted and showed the following data.

Machinery, at cost
Accumulated depreciation
Carrying amount
Appreciation of building credited to
retained earnings
Deprecated replacement cost

Required :
Prepare journal entry to correct the accounts in order to show the building at revalued amount.
The entity is using the elimination approach in recording revaluation

38-17
In January 1, 2015, Seductive Company revealed the following historical balance of land and
building
Cost Accumulated depreciation
Land
Building

The land and building were appraised on same dare and revaluation showed the following :
Land
Building

There were no additions or disposals during the current year. Depreciation is computer in the
straight line basis. The estimated useful life of the building is 20 years.

1. What is the revaluation surplus on January 1, 2015?

2. What is the depreciation of the building for the current year?
3. What is the revaluation surplus on December 31, 2015?