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Determine the carrying amount of the asset

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Entity 3 purchased an asset for £100,000 on 1 January 2018. It has a useful economic life of 10 years with no residual value. It is subject to the straight-line depreciation method. On 31 December 2018, it was revalued to £135,000 with no change to its remaining useful economic life or residual value.

On 31 December 2019, the fair value less selling cost of this asset was £95,000. This asset is expected to generate a net cash flow of £7,500 per year from 1 January 2020 onward.

The discount rate is 6% per year for Entity 3.

Question (i) What is the carrying amount of this asset and the revaluation reserve as on 31 December 2018?

Question (ii) Calculate the Value in Use of this asset as at 31 December 2019.

Question (iii) Determine the carrying amount of this asset and the revaluation reserve as at 31 December 2019.

Reference no: EM132546030

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