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Questions and Answers
What is the policy of Bumel Limited regarding the revaluation of its plant?
What is the policy of Bumel Limited regarding the revaluation of its plant?
Revalue plant every two years on a gross replacement value basis.
How does Bumel Limited treat the revaluation surplus on the plant?
How does Bumel Limited treat the revaluation surplus on the plant?
Realize the revaluation surplus whilst the asset is being used.
How does Bumel Limited account for accumulated depreciation after revaluation?
How does Bumel Limited account for accumulated depreciation after revaluation?
Offset the accumulated depreciation against the gross carrying amount of the asset on revaluation.
What method does Bumel Limited use to depreciate its plant?
What method does Bumel Limited use to depreciate its plant?
How often does Bumel Limited revalue its plant?
How often does Bumel Limited revalue its plant?
What must be the basis for calculating depreciation in the current year according to Bumel Limited's policy?
What must be the basis for calculating depreciation in the current year according to Bumel Limited's policy?
Flashcards
Plant Revaluation Policy
Plant Revaluation Policy
Bumel Limited revalues its plant every two years based on gross replacement value.
Revaluation Surplus Treatment
Revaluation Surplus Treatment
Bumel Limited realizes the revaluation surplus while the asset is in use.
Accumulated Depreciation Handling
Accumulated Depreciation Handling
Bumel Limited offsets accumulated depreciation against the gross carrying amount upon revaluation.
Depreciation Method
Depreciation Method
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Depreciation Basis
Depreciation Basis
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Study Notes
Bumel Limited - Plant Revaluation and Depreciation
- The company revalues its plant every two years on a gross replacement value basis.
- As of 31 December 2022, the plant's gross replacement cost is R1 470 000.
Plant Details
- Cost price: R1 260 000 (purchased on 1 January 2020)
- Residual value: Rnil
- Useful life: 10 years
Depreciation
- Depreciation method: Straight-line basis
- Depreciation calculation: Based on the revalued amount of the plant
- Depreciation expense will be calculated for the year ended 31 December 2022
Revaluation and Accumulated Depreciation
- Revaluation surplus is realized while the asset is in use
- Accumulated depreciation is offset against the gross carrying amount of the asset on revaluation
Taxation
- Tax rate: 28%
- Note: Deferred tax resulting from wear and tear allowances is ignored
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