In 2016:

• The asset was initially recognised at cost (GH¢45,000).
• Amortisation for the year is based on the original cost:
  Amortisation (2016) = GH¢45,000 ÷ 9 years = GH¢5,000
• At the end of 2016, the asset was revalued to GH¢54,400.
• The revaluation surplus is the difference between the carrying amount and the revalued amount:
  Revaluation surplus (2016) = GH¢54,400 – (GH¢45,000 – GH¢5,000) = GH¢14,400
• The revaluation surplus is recorded in Other Comprehensive Income (OCI) and credited to the revaluation reserve in equity.

In 2017:

• The asset’s carrying amount at the start of 2017 is GH¢54,400, and the useful life is now 8 years.
• Amortisation for the year is based on the revalued amount:
  Amortisation (2017) = GH¢54,400 ÷ 8 years = GH¢6,800
• A transfer should be made from the revaluation surplus to retained earnings for the excess depreciation:
  Excess depreciation = GH¢6,800 – GH¢5,000 = GH¢1,800
• As at 31 December 2017, the asset was revalued downward to GH¢32,000.
• The revaluation loss is calculated as follows:
  Revaluation loss (2017) = GH¢32,000 – (GH¢54,400 – GH¢6,800) = GH¢15,600
• The revaluation reserve is reduced first by the GH¢12,600 balance, and the remaining GH¢3,000 is recognised as an expense in the Profit or Loss statement.

(4 marks evenly spread)