Answer:
Option "B" is the correct answer to the following question
Explanation:
Given:
Fair value of plant = $100 million
Book value of plant = $60 million
Estimated life = 20 year
Computation of gain on revaluation:
Gain on revaluation = Fair value of plant - Book value of plant
Gain on revaluation = $100 million - $60 million
Gain on revaluation = $40 million
Computation of per year extra wright off :
Per year extra wright off = $40 million / 20 year
Per year extra wright off = $2 million per year
Two-year elimination amount is 2-year × Per year extra wright off
Two-year elimination amount is $4 million
Opening balance of third-year amortization is $40 million - $4 million = $36 million
So, the amount of eliminating entry is $36 million and write off the value of $2 million
