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Villa Bhd acquired a sport equipment for RM500,000 on 1 January 2013 and recognized under MFRS116
Villa Bhd acquired a sport equipment for RM500,000 on 1 January 2013 and recognized under MFRS116. The life span of the asset is expected to be 10 years. The fair value of the asset on 1 January 2015 was determined at RM380,000. Required: a) Prepare the journal entries on the revaluation of the asset on 1 January 2015. (3 marks) ACIASSIGNMENT 1/FAR320 b) The asset was disposed for RM450,000 on 31 December 2015. Determine the amount of gain or loss from disposal of the asset as at that date.
Expert Solution
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Calculation of carrying amount of sport equipment on 1 January 2015
Depreciation for two years (RM500000*2/10) = 100000
carrying amount of sport equipment on 1 January 2015 = (500000 – 100000)
= RM400000
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Calculation of revaluation gain or loss on 1 jan 2015
carrying amount = RM 400000
Fair value = RM 380000
Deficit ( 400000 – 380000) = 20000
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Carrying amount of sport equipment on 31 dec 2015
(400000 – 20000 - (380000/8)) ( carring amount - deficit - depreciation )
= 332500
a. Journal entry
Dr SOPL RM20,000
Cr sport equipment RM20,000
b. Calculation of amount of gain or loss on disposal of asset
dispose amount - Carrying amount of asset
450000 – 332500
Gain on disposal of asset = 117500
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