In a previous period Banshee Ltd wrote-off its 'dynamic mover' equipment,but new information has shown that it is probable that the future economic benefits exceed its cost of $40 000.What is the appropriate accounting entry?
E) None of the given answers.

Question

Quizplus · Accepted Answer

The appropriate accounting entry in this case is to reverse the write-off entry that was made earlier and restore the equipment to its original value. This can be done by debiting the equipment account and crediting the accumulated depreciation account for the original cost of $40,000. The journal entry would be: 
Equipment $40,000
Accumulated depreciation $40,000
To reverse write-off of equipment
This will result in the equipment being back on the balance sheet at its original value, thereby recognizing the future economic benefits that exceed its cost.

In a Previous Period Banshee Ltd Wrote-Off Its 'Dynamic Mover