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Franco Company uses IFRS and owns property, plant, and equipment with a historical cost of $5,000,000. At December 31, 2016, the company reported a valuation reserve of $690,000. At December 31, 2017, the property, plant, and equipment was appraised at $5,325,000. The valuation reserve will show what balance at December 31, 2017?

Respuesta :

ProfLincoln

Answer:

$325,000

Explanation:

Valuation reserve is the amount added to to an asset to absorb for any future decrease in the value of such asset.

Given:

Real cost of property, plant, and equipment = $5,000,000

Appraised later/future cost = $5,325,000

Valuation reserve= later/future Appraisal cost - Real cost

=$5,325,000 - $5,000,000

=$325,000