Light Company bought a machine for 300,000 on January 1, 20x8. The machine's useful life is 10 years and it is estimated to have a zero residual value and is depreciated using the straight-line method.

The revalued amount of the machine is as follows:

December 31Fair values of the machine

20x8 360,000

20x9335,000

2x10320,000

The enacted tax rate was 30% for each year

1.The revaluation surplus in the equity section of Light Company'sDecember 31, 20x8 statement of financial position is

a. 60,000

b. 90,000

c. 39,000

d. 63,000

2.The amount of depreciation expense to be recognized in 20x9 is

a. 32,500

b. 36,000

c. 40,000

d. 42,500

3.The amount ofrevaluation surplus transferred to retained earnings in 20x9 is

a.6,667

b.7,000

c.4,333

d. 10,000

4.The revaluation surplus in the equity section of LightCompany's December 31, 2x10 statement of financial position is

a.77,000

b. 110,000

c. 123,443

d. 109,500

Use the following information for the next four items:

Information on Mix Co.'s equipment on June 30, 20x8 is shown below:

Equipment (at cost)500,000

Accumulated depreciation150,000

350,000

The equipment consists of two machines, Machine A and Machine B. Machine A has a cost of 300,000 and a carrying amount of 180,000. Machine B has a cost of 200,000 and a carrying amount of 170,000. Both machines are measured using the cost model and depreciated on a straight line basis over a ten-year period.

On December 31, 20x8, Mix Co. decided to change from the cost model to the revaluation model. Information on this date follows:

Fair valuesRemaining useful life

Machine A180,0006 years

Machine B155,0005 years

On June 30, 20x9, Machine A and Machine B have fair values of 163,000 and 136,500, respectively, and remaining useful lives of 5 years and 4 years, respectively. The tax rate is 30%.

5.How much is the depreciation expense for the fiscal year ended June 30, 20x9?

1. 59,900
2. 55,500
3. 50,000
4. 67,000

6.How much is the revaluation surplus on December 31, 20x8?

1. 10,500
2. (15,000)
3. (10,500)
4. 7,000

7.How much is the carrying amount of the equipment on June 30, 20x9?

1. 163,000
2. 335,000
3. 300,000
4. 299,500

8.Entity A has identified indications that its plant is impaired. The plant has a carrying amount of 56,000,000. An independent valuer determined the following:

Replacement cost of the plant90,000,000

Actual life 15 years

Effective life 25 years

Remaining economic life 20 years

Entity A's tax rate is 30%.

How much is the revaluation surplus, net of tax?

a.16,000,000

b.11,200,000

c.18,250,000

d.12,775,000