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Hi Sir,
Can you please help me with this question? the 4% depreciation bit is confusing me.
Mustique bought some freehold land and buildings on 1st August 20X8 for $760,000 including $160,000 for the land. On 1st August 20Y8 the property was professionally revalued at $1,600,000 including $400,000 for the land. These values were recorded in the books and it was estimated that the buildings had a remaining Useful life of twenty years and a residual value of $200,000.
The building had been depreciated at 4% per annum for each of the 10 years to 31st July 20Y8.
What was the carrying value of the land and buildings on 31st July 20Y9
thanks in advance
Just clear up one tiny bit of confusion that I’m facing …. your post says “had a remaining useful life of 20 years”
Please confirm that this is a further 20 years as at revaluation date. So for 10 years we have depreciated at 4% and now we’re facing a further 20 years. That’s probably correct, but I want positive confirmation
Thanks
Hi Mike,
I can only assume your interpretation is correct! I am as confused as you! Its a question from Kaplan online questions!! I think you are correct, because the answer does not depreciate at 4% so I think yes- it is a further 20 years as at revaluation date.. what in the wording of the question are you reading to help you come to that conclusion? That is the bit that is confusing me!
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