Question
Hampton Plc. revalues equipment with a carrying value of 715,000 to its fair value of 750,000. The original cost of the equipment was 1,000,000. Hampton
Hampton Plc. revalues equipment with a carrying value of 715,000 to its fair value of 750,000. The original cost of the equipment was 1,000,000. Hampton uses straight-line depreciation. The equipment has a 10-year useful life and scrap value of 50,000. Assume Hampton eliminates all prior accumulated depreciation and adjusts the historical cost to fair value.
a. What is the revaluation surplus or unrealized loss?
b. Where does the firm report the revaluation surplus or unrealized loss in the financial statements?
c. What are the journal entries to record the revaluation?
d. What is the depreciation expense on the equipment after the revaluation?
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