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01Jan08 building valued $100
Economic life 20yrs
Depn method: straight line
Nil residual31Dec08 revalued downwards $91.2
31Dec09 revalued $91.8What are the revaluation adjustment at 31Dec08 and 31Dec09?
Could anyone help me handle this questions as the example in the text book did not give instruction on decrease revaluation?
Depreciate for year 2008 by 5 gives cv of 95
Revalue to 91.2 Dr PorL 3.8 Cr TNCA 3.8
Depreciate for 2009 (91.2/19) ie by 4.8 gives cv of 86.4
Revalue to 91.8
HOWEVER!!! We cannot reverse a revaluation to a level that is greater than what it would have been had we not impaired in the first place. In this example, we cannot reverse to a level >90 (100 – 2 year’s depreciation)
Dr TNCA 3.6 and Cr PorL 3.6 gives a cv of 90
Now revalue Dr TNCA 1.8 Cr Revaluation Reserve 1.8 gives a cv of 91.8
Ok?
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