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Example 7.2
Chiboko Ltd has a machine BX which has a carrying value of TZS 80,000,000.
However, after revaluation the machine was re-valued at TZS 88,000,000. In the
previous revaluation, which is the last year, its value was decreased by TZS 5,000,000.

Required: Record journal entries in Chiboko’s books to demonstrate the proper
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procedure for entering revaluation adjustments.

Solution 7.2
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Increase in the value due to revaluation is TZS 8,000,000 (TZS 88,000,000 – TZS
80,0000,000). The previous reduction of TZS 5,000,000 must have been recognised in
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the profit or loss part of statement of profit or loss and other comprehensive income.
The following journal entry should now be made:
Dr Machine BX TZS 8,000,000
Cr Revaluation loss (P & L) TZS 5,000,000
Cr Revaluation surplus TZS 3,000,000

Being accounting entries to record the increase in the value of machinery.

Example 7.3
The carrying value of machine AY is TZS 60 million, but following a revaluation, it
is valued at TZS 50 million. On the previous revaluation, which was done last year its
value was increased by TZS 7 million (the amount in the revaluation surplus).

Required: What would the accounting entries be?

Solution 7.3
The revaluation exercise decreased the value of machine AY by TZS 10 million (TZS
60 million – TZS 50 million). The credit balance in revaluation surplus against this asset
is TZS 7 million. The following entry will be recorded:

Dr Revaluation surplus (in equity) TZS 7,000,000
Dr Loss on revaluation (P/ L part) TZS 3,000,000

Cr Machinery TZS 10,000,000
Being revaluation decrease transferred to machinery account.

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