Revaluation increment .Assume that, as at 1 July 2018, Farrelly Ltd has an item of machinery that originally cost $40 000 and has accumulated depreciation of S15 000. Its remaining life is assessed to be five years, after which time it will have no residual value. While completing a regular revaluation of all machinery, Farrelly decided on 1 July 2018 that the item should be revalued to its current fair value, which was assessed as S45 000. July 2018 that the item should be revalued to es cunent air vallue, whch wa ssessed as 45 000 At initial recognition 1 Jul 2016 Cr Subsequent recognition at cost Depreciatien 30 jun 2017 1st y Dr Acc dep Carrying amount Fair value Surplus 7.500 Acc dep 7500 2nd yr 30 jun 2018 7.500 Atc dep Acc dep 7,500 30 June 201 Act dep Revaluation decrement Young Ltd acquires some machinery at a cost of $150 000 on 1 July 2017. On 30 June 2018, the machinery, which has an accumulated depreciation balance of S20,000, is assessed as having a fair value equal to S100,000. Young Ltd measures machinery at fair value. Initial recognition 1 July 2017 Book value Asc dep Carryingamount 150,000 Cash Subnequent secognition at cost Depreciation 30 jun 2018 st yr Acc dep Acc dep Loss on revaluation of machinery 00 30 June 2018 Acc dep This example is also the a case for impairment loss where a change from cost method to revaluation method. Notice that the accounting treatment is similar Revaluation increment .Assume that, as at 1 July 2018, Farrelly Ltd has an item of machinery that originally cost $40 000 and has accumulated depreciation of S15 000. Its remaining life is assessed to be five years, after which time it will have no residual value. While completing a regular revaluation of all machinery, Farrelly decided on 1 July 2018 that the item should be revalued to its current fair value, which was assessed as S45 000. July 2018 that the item should be revalued to es cunent air vallue, whch wa ssessed as 45 000 At initial recognition 1 Jul 2016 Cr Subsequent recognition at cost Depreciatien 30 jun 2017 1st y Dr Acc dep Carrying amount Fair value Surplus 7.500 Acc dep 7500 2nd yr 30 jun 2018 7.500 Atc dep Acc dep 7,500 30 June 201 Act dep Revaluation decrement Young Ltd acquires some machinery at a cost of $150 000 on 1 July 2017. On 30 June 2018, the machinery, which has an accumulated depreciation balance of S20,000, is assessed as having a fair value equal to S100,000. Young Ltd measures machinery at fair value. Initial recognition 1 July 2017 Book value Asc dep Carryingamount 150,000 Cash Subnequent secognition at cost Depreciation 30 jun 2018 st yr Acc dep Acc dep Loss on revaluation of machinery 00 30 June 2018 Acc dep This example is also the a case for impairment loss where a change from cost method to revaluation method. Notice that the accounting treatment is similar