PROBLEM 31-1

1 % of AD = 900/4,500 = 20%
LIFE = 3/20% = 15 years
2 Machinery (7.2m - 4.5m) 2,700,000
AD 540,000
Revaluation Surplus 2,160,000
3 Depreciation (7.2m/15) 480,000
AD 480,000

Previous Dep. (4.5m/15) 300,000

New Dep. 480,000
Increase in Dep. (2.7m/15) 180,000

4 Revaluation Surplus (2.16m/12) 180,000

Retained Earnings 180,000

PROBLEM 31-2

1 LIFE = 5/(750/3,000) = 20 years

2 Equipment 1,800,000
AD 450,000
Revaluation Surplus 1,350,000
3 Depreciation (4.8m/20) 240,000
AD 240,000
4 Revalaution Surplus (1.35m/15) 90,000
Retained Earnings 90,000

PROBLEM 31-3
*Proportional Approach
1 Building 3,000,000
AD 750,000
Revaluation Surplus 2,250,000

Gross Revalued Amount (6m/75%) 8,000,000

Cost 5,000,000
Total increase 3,000,000
AD (3,000,000 x 25%) 750,000
Net increase 2,250,000

Depreciation (8m/40) 200,000

AD 200,000
Revaluation Surplus (2.25m/30) 75,000
Retained Earnings 75,000
*Elimination Approach
2 AD 1,250,000
Building 1,250,000
Building 2,250,000
Revaluation Surplus 2,250,000

Depreciation (6m/30) 200,000

AD 200,000
Revaluation Surplus (2.25m/30) 75,000
Retained Earnings 75,000

PROBLEM 31-4

Equipment 2,700,000
AD 500,000
RS 2,200,000

New Dep. Amt (9.2m - 200k) 9,000,000

Multiply to 2/12 *2/12
Revised AD 1,500,000
AD per book (6m x 2/12) 1,000,000
Increase in AD 500,000

DRC = 9.2m - (9m x 2/12) 7,700,000

CA per book = 6.5m - (6m x 2/12) 5,500,000
RS 2,200,000

Depreciation (9m/12) or 7.5m/10 750,000

AD 750,000
RS (2.2m / 10 220,000
RE 220,000

Entry to record the sale:

Cash 8,000,000
AD (9,000,000 x 3/12) 2,250,000
Equipment 9,200,000
Gain on sale 1,050,000

RS 2,200,000 - 220,000 1,980,000

RE 1,980,000