Activity 2: Revaluation and depreciation

Crinkle prepares its financial statements to 31 December each year. It bought an asset that had a useful life of five years for $10,000 in January 20X6. On 1 January 20X8, the asset was revalued to $12,000. The expected useful life has remained unchanged (ie three years remain). It is the policy of Crinkle to make a reserve transfer for excess depreciation.

Required

Account for the revaluation and state the treatment for depreciation from 20X8 onwards.