PROBLEM #1

On Jan. 1, 2020, GHI Corporation acquired a P2,000,000 equipment which it accounts under the revaluation model. It can be used in the production line for 10 years. After use, it can be sold for P250,000. On Jan. 1, 2023, GHI is revaluing the asset. It has a sound value of P2,250,000 and a revised residual value of P500,000.

If GHI uses the proportional method, what is the journal entry on Jan. 1, 2023 to record the revaluation? How much is the revaluation surplus to be recognized?

PROBLEM #2

An equipment was acquired for P3,000,000 on Jan. 1, 2018. It is being depreciated to a salvage value of P400,000 over 10 years. It has the following revaluation details: (A) Jan. 1, 2021 - Replacement cost of P4,100,000 and remaining useful life of 7 years, (B) Jul. 1, 2026 - Replacement cost of P3,500,000 and remaining useful life of 3 years.

After recording the depreciation as of Jul. 1, 2026, what is the journal entry to record the change in revaluation using the proportionate method? How much should be (debited) or credited to revaluation surplus?