Answer:
The correct interpretation of the given problem is outlined in the following portion of the explanation.
Explanation:
On 2019,
Company purchased = $540,000
Life useful = 5 years
(1)...
On year 2019,
On putting the values, we get
⇒
⇒
Journal - Dr $108,000 in depreciation A/c.
(2)...
Assets A/c Dr $ 92,880, To reassess surplus $92,880
Now,
On putting the values, we get
⇒
⇒ (Gained revaluation)
(3)...
On year 2020,
On putting values,
⇒
⇒
Journal - Depreciation A/c Dr. $131,220
.
(4)...
Surplus revaluation: Dr $39,312
On putting values,
⇒
⇒ (Loss revaluation)