Question 1: Tangible asset

PPE of XYZ comprise of the following:

Plant Machinery
A B C D
at 31st Dec 20X4:
Cost 500 600 300 800
Accumulated Depn (100) (100) (200) (300)
Remaining useful years 4 5 1 5
Fair value as of 31st Dec 20X4 600 400 120 450
Fair value as of 31st Dec 20X5 200 470 - 350
XYZ wants to use the revaluation model on A from 20X4’s accounts onwards.
Company’s policy is to depreciate all assets using straight – line method.
Required:
- Fill in the following table and prepare journal entries for revaluation of NCA
Plant A Plant B
CV as at 31st Dec 20X4 400 500
Surplus/Deficit 200 (100)
FV as at 31st Dec 20X4 600 400
Depreciation for 20X5 (150) (80)
CV as at 31st Dec 20X5 450 320
Deficit/Surplus (250) 150
FV as at 31st Dec 20X5 200 470
Plant A
20X4 Dr Plant A (cost) 200
Cr Other comprehensive income (Revaluation surplus) 200
20X5 Dr Other comprehensive income (Revaluation deficit) 250
Dr Accumulated depreciation 150
Cr Plant A (cost) 400
Plant B
20X4 Dr Other comprehensive income (Revaluation deficit) 100
Cr Plant B 100
20X5 Dr Plant B 70
Dr Accumulated depreciation 80
Cr Other comprehensive income (Revaluation Surplus) 150

Plant C
20X4 Dr Machinery C 20
Cr OCI (Revaluation surplus) 20
20X5 Dr Depreciation expense 120
Cr Accumulated depreciation
Plant D
20X4 Dr OCI (Revaluation deficit ) 50
Cr Machinery D 50
20X5 Dr OCI (Revaluation deficit) 10
Dr Accumulated depreciation 90
Cr Machinery D 100

Question 3 (Gov grant):

On 1 January 2010, ABC acquired a machine at a cost of $60mil.
The economic useful life of the machine is estimated to be 10 years with a nil residual
value. ABC uses straight line depreciation.
ABC received a grant of $10m from the government on 1 Jan 2010 for the machine
acquisition
Required:
Using journalize entries to illustrate the accounting treatment for the gov grant of $10m
Dr Cash $10m
Cr Cost of assets $10m
Dr Depreciation expense $5m
Cr Accumulated depreciation $5m *
Cost of asset decreases by $10m, the new depreciation would be: (60-10)/10=$5m