A company purchased plant and equipment 4 years ago for $100 000. Depreciation is provided using the straight line method over 10 years. The company decided to revalue at the end of the fourth year. The carrying amount was $60 000. The net replacement cost of the plant and equipment was considered to be $75 000 at that date. Calculate the gross replacement cost Calculate accumulated depreciation on gross replacement cost Calculate the carrying amount [12]

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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A company purchased plant and equipment 4 years ago for $100 000. Depreciation is provided using the
straight line method over 10 years. The company decided to revalue at the end of the fourth year. The
carrying amount was $60 000. The net replacement cost of the plant and equipment was considered to
be $75 000 at that date.

Calculate the gross replacement cost
Calculate accumulated depreciation on gross replacement cost
Calculate the carrying amount [12]

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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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