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Burgundy Limited purchased a plant on 2 January 20X1 for C80 000. The plant is measured under the revaluation model, using the net replacement value method, and is depreciated on the straight-line basis, over its estimated economic useful life of 5 years, to a nil residual value. The following fair values were measured by an independent valuer using the cost approach (often called the current replacement cost): Date Fair value 01 January 20X2 C96 000 01 January 20X3 C40 000 01 January 20X4 C40 000 Burgundy transfers a portion of the revaluation surplus to retained earnings on an annual basis. There were no indications of impairment at the end of any of the years. Required: Show all related journal entries for the years ended 31 December 20X2, 20X3 and 20X4. Ignore tax.

Burgundy Limited purchased a plant on 2 January 20X1 for C80 000. The plant is measured under the revaluation model, using the net replacement value method, and is depreciated on the straight-line basis, over its estimated economic useful life of 5 years, to a nil residual value. The following fair values were measured by an independent valuer using the cost approach (often called the current replacement cost): Date Fair value 01 January 20X2 C96 000 01 January 20X3 C40 000 01 January 20X4 C40 000 Burgundy transfers a portion of the revaluation surplus to retained earnings on an annual basis. There were no indications of impairment at the end of any of the years. Required: Show all related journal entries for the years ended 31 December 20X2, 20X3 and 20X4. Ignore tax.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section9.A: Depreciation
Problem 5P
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Burgundy Limited purchased a plant on 2 January 20X1 for C80 000. The plant is measured under the revaluation model, using the net replacement value method, and is depreciated on the straight-line basis, over its estimated economic useful life of 5 years, to a nil residual value. The following fair values were measured by an independent valuer using the cost approach (often called the current replacement cost): Date Fair value 01 January 20X2 C96 000 01 January 20X3 C40 000 01 January 20X4 C40 000 Burgundy transfers a portion of the revaluation surplus to retained earnings on an annual basis. There were no indications of impairment at the end of any of the years. Required: Show all related journal entries for the years ended 31 December 20X2, 20X3 and 20X4. Ignore tax.
Transcribed Image Text:Burgundy Limited purchased a plant on 2 January 20X1 for C80 000. The plant is measured under the revaluation model, using the net replacement value method, and is depreciated on the straight-line basis, over its estimated economic useful life of 5 years, to a nil residual value. The following fair values were measured by an independent valuer using the cost approach (often called the current replacement cost): Date Fair value 01 January 20X2 C96 000 01 January 20X3 C40 000 01 January 20X4 C40 000 Burgundy transfers a portion of the revaluation surplus to retained earnings on an annual basis. There were no indications of impairment at the end of any of the years. Required: Show all related journal entries for the years ended 31 December 20X2, 20X3 and 20X4. Ignore tax.
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