LaPerm Company reported the following account balances on December 31, 2021 Land 15,000,000 Building 120,000,000 Accumulated depreciation 40,000,000 Property, plant, and equipment have been carried using the cost model since acquisition. The land was acquired 15 years ago while the building’s construction was completed on January 1, 2012. The straight line method for depreciation is used. The total life of the building is 30 years. On January 1, 2022, the entity adopted the revaluation model. It was determined that the land’s current fair value is P25,000,000 and the building’s current replacement cost is P150,000,000 on such date. What is the revaluation surplus on December 31, 2022? A . 29,000,000 B. 30,000,000 C. 28,500,000 D. 19,500,000
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
LaPerm Company reported the following account balances on December 31, 2021
Land 15,000,000
Building 120,000,000
Accumulated depreciation 40,000,000
Property, plant, and equipment have been carried using the cost model since acquisition. The land was
acquired 15 years ago while the building’s construction was completed on January 1, 2012. The
line method
adopted the revaluation model. It was determined that the land’s current fair value is P25,000,000 and the
building’s current replacement cost is P150,000,000 on such date. What is the revaluation surplus on
December 31, 2022?
A
.
29,000,000 B. 30,000,000 C. 28,500,000 D. 19,500,000
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