CPA REVIEW SCHOOL OF THE PHILIPPINES
Manila
FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/SANTOS
MAY 2024 CPALE BATCH 95
REVALUATION
1. On January 1, 2024, an entity owned an equipment costing P5,200,000 with residual value of P400,000.
The life of the asset is 10 years and was depreciated using the straight line method. On such date, the
equipment had a replacement cost of P8,000,000 with residual value of P200,000.
The age of the asset is 4 years. The appraisal of the equipment showed a total revised useful life of 12
years and the entity decided to carry the equipment at revalued amount.
I. The revalued amount of property, plant and equipment is the fair value or depreciated replacement
cost where market value is not available.
II. The revaluation surplus is the excess of the fair value or sound over the carrying amount of the asset
III. The pretax revaluation surplus is P1,400,000 on December 21, 2024
IV. The depreciation of the equipment is P780,000 for 2024.
a. All statements are true
b. All statements are not true
c. Only statements I and II are true
d. Only statements I, II and III are true
2. On January 1, 2024, an entity showed land with carrying amount of P50,000,000 and building with cost
of P300,000,000 and accumulated depreciation of P90,000,000. The land and building were revalued on
same date and the revaluation revealed the land with sound value of P70,000,000 and the building with
sound value of P315,000,000.
There were no additions or disposals during 2024. The original useful life of the building is 20 years and
depreciation is computed on the straight line.
I. The pretax revaluation surplus is P117,500,000 on December 31, 2024.
II. The depreciation of the building is P22,500,000 for 2024.
a. Statements I and II are true
b. Statements I and II are not true
c. Only statement I is true
d. Only statement II is true
3. On June 30, 2024, an entity reported the following information:
Equipment at cost 30,000,000
Accumulated depreciation 10,500,000
The equipment was measured using the cost model and depreciated on a straight line basis over
10-year period. On December 31, 2024, the management decided to change the basis of measurement
from the cost model to the revaluation model. The equipment was revalued at the fair value of
P27,000,000 with no change in useful life. The income tax rate is 25%.
I. The revaluation surplus is P7,500,000 on December 31, 2025.
II. The depreciation of the equipment is P2,700,000. For 2025.
a. Statements I and II are true
b. Statements I and II are not true
c. Only statement I is true
d. Only statement II is true
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