Question 1 Tap Sdn Bhd bought an asset on 5 April 2017 at a costof RM180,000. The asset had an expected useful life of 10 years andan expected residual value of RM20,000. The company appliesstraight-line depreciation to this category of non-current assets.It also charges a full year depreciation in the year of acquisitionand no depreciation in the year of disposal. Its financial yearends on 31 December.
At 31 December 2018, the company revalued the asset toRM240,000. Its expected remaining useful life is now 8 years, butits expected residual value is zero.
Required:
(a) Show in T account the accounting entries required to recordthe revaluation of the asset on 31 December 2018. [4 marks]
(b) The asset was sold on 12 February 2020 for RM235,000.Calculate the gain or loss on disposal reported in the incomestatement for Year 2020, and show the total effect on the disposalon the retained earnings of the company. Ignore taxation. [4marks]
