Asset Fair Value Percent (%) Allocated Cost

Land 476,190 15 432,900

Building 793,650 25 721,500
Equipment 1,269,840 40 1,154,400
Inventories 634,920 20 577,200
Total 3,174,600 100 2,886,000
 Fraction of
Date Expenditure construction Period AAE
20X2 630,000 9-Sep 630,000
28/02/20X3 90,000 9-Jul 70,000
30/4/20X3 180,000 9-May 100,000
1/7/20X3 36,000 9-Mar 12,000
30/9/20X3 64,000 0/9 -
Total 1,000,000 812,000

Interest = 73,080 (= 812,000*12%*9/12)

Capitalized cost of the company = 1,073,080 (= 1,000,000+73,080)
12,000*12%*9/12)
000,000+73,080)
 1
Depreciation expense 20X1 30,000

2
At 31/12 Book value 390,000
Fair value 358,800
Loss 31,200

Dr Depreciation expense
Cr Equipments
Dr Loss on Revaluation
Cr Equipments
3
Depreciation expense 20X2 55,200

4
4.2
Book value 390,000
Fair value 405,600
Gain 15,600

Dr Depreciation expense
Cr Equipments
Dr Other comprehensive income - gain on revaluation
Cr Retain Earning
4.3
Depreciation expense 20X2
Before Revaluation
After Revaluation
Record the realize revaluation surplus at the end 20X2
Dr Revaluation Surplus
Cr Retain Earning
30,000
30,000
31,200
31,200

30,000
30,000
15,600
15,600

60,000
62,400

2,400
2,400
 1
2/1/20X2
Dr PPEs
Cr Cash
31/12/20X2
Dr Depreciation expense
Cr Accumulated Depreciation
Fair Value 468,000
Gain 18,000
Dr Accumulated Depreciation
Cr PPEs
Dr PPEs
Cr Other comprehensive income - gain on revaluation
31/12/20X3
Dr Depreciation Expense
Cr Accumulated Depreciation
Fair Value 380,000
Loss 36,000 (380.000-(468.000-52.000) = -36.000)
Dr Accumulated Depreciation
Cr PPEs
Dr Other comprehensive income - gain on revaluation
Dr Impairment loss (expense)
Cr PPEs
31/12/20X4
Dr Depreciation Expense
Cr Accumulated Depreciation
Fair Value 335,000
Gain 2,500
Dr Accumulated Depreciation
Cr PPEs
Dr PPEs
Cr Impairment loss (expense)
2/1/20X5
Book value 335,000
Dr Cash
Dr Impairment loss (expense)
Cr PPEs
 500,000
500,000

50,000
50,000

50,000
50,000
18,000
me - gain on revaluation 18,000

52,000
52,000

52,000
52,000
18,000
18,000
36,000

47,500
47,500

47,500
47,500
2,500
2,500

330,000
5,000
335,000
1/1/Y1 Purchased for a machine
Residual value
Useful life
Depreciation expense for Year 1
1/1/Y3
Carrying amount 216,005
Fair Value 250,000
Revaluation Surplus 33,995
31/12/Y3 Depreciation expense for Year 3
Carrying amount for Year 3
31/12/Y4
Useful life 10
Depreciation expense for Year 4
Carrying amount
Recoverable amount 100,000
-> Impairment loss= Carrying amount - Recoverable amount
240,000
50
20
11,998

13,889
236,111

25,000
211,111

211,111
year CF discount factor present value
20X4 10.200 0.952 9.714
20X5 9.550 0.907 8.662
20X6 8.900 0.864 7.688
20X7 8.250 0.823 6.787
20X8 7.600 0.784 5.955
20X9 6.950 0.746 5.186
20X10 6.300 0.711 4.477
20X11 5.650 0.677 3.824
20X12 5.000 0.645 3.223
20X13 4.350 0.614 2.671
72.750 0

Value in use 43.188

Fair value less cost to sell 42
Recoverable amount 43.188
Carrying amount 50
Impairment loss 6.812

Allocate the impairment to asset

Asset CA %
Reactors, tower, store, equipment 55000 0,85
Other technical facilities 8000 0,12
Administrative building 2000 0,03
Total 65000 1

Dr impairment loss 6.812

Cr PPE (Reactors, tower, store, equipment) 5.764
Cr PPE (Other technical facilities) 838
Cr PPE (Administrative building) 210
 Allocated
impairment loss
5.764
838
210
6.812
 At the beginning of Year 1
Equipment 200
Depreciation expense for year 1 10
CA of year 1 190

At the end of Year 1

Depreciation expense for year 2 10
CA of year 2 180
RA 144
Impairment loss 36

Dr Impairment loss 36
Cr Equipment 36

At the end of Year 4

CA 128
CA (if there was no impairment) 160
Reversal of impairment 32

Dr Equipment 32
Cr Reversal of impairment 32