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Illustration 2 : Revalution of property, plant and equipment Laju Bhd acquired a building for RM5,000,000 on 1 January 2014. The estimated useful life of the building was 40 years. On 1 January 2018, the building was revalued and its fair value on that date was RM7,200,000. Laju Bhd also revalued its land on 1 January 2018 at the fair value of RM800,000. The land was bought by Laju Bhd on 1 January 2015 for RM500,000. On 31 December 2018, Laju Bhd revalued its equipment to RM200,000. The equipment was purchased by Laju Bhd on 1 January 2016 for RM300,000 with the estimated useful life of 10 years.

Required: Prepare the schedule of movement of Laju Bhd’s assets for the year ended 31 December 2018. Solution- illustration 2 Steps 1.

Analyse the information given : Revaluation of land, building and equipment Timeline : building

Timeline : Land

3 years 1.1.2015

1.1.2018

Acquisition :

Revaluation

Land=RM500,000

FV=RM800,000

31.12.2018

CA=W2

Steps a

Determine the FV as at 1.1.2018

RM800,000

b

Determine the carrying amount (CA) as at 1.1.2018: W2

RM500,000

=RM500,000-0=500,000 Since FV>CA, there is a surplus on revaluation

RM300,000


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