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Sir i have one Question which is literally just making my mind go crazy, i can’t figure it out so if you could help me, that would be appreciated.
My Q is,
1.
Callium owns land and buildings which cost $250,000 including $75,000 for the land on 1 November 2008. The buildings had a useful life of 40 years. Callium revalued the land and buildings to their current value of $500,000 on 1 November 2009. The valuation included $140,000 for the land.
There was no change in the remaining useful life of the buildings after revaluation.
Callium’s financial years ends on 31 October and depriciation is provided for using the straight-line method.
What should the balance on revaluation surplus be immediately after the revaluation?a. $236,875
b. $268,750
c. $263,125
d. $333,750Surely you have an answer in whichever book in which you found the question (if not you should be using a different book!!)?
You should use this forum to ask about any problems you have after watching our free lectures, or for any specific problems that you have understanding any answers in your books. This forum is not for requesting full answers to test questions!The building will be depreciated by 175,000/40 = 4,375 per year.
Therefore the book value of the land and buildings at 1 Nov 2009 will be 250,000 – 4,375 = 245,625.
They are revalued to 500,000, and therefore the revaluation surplus will be 500,000 – 245,625 = 254,375Since that is not one of the 4 choices, it means that either you have mistyped something wrongly in the question (check the dates in particular) or there is a mistake in your book.
(According to the dates you have typed, they had the assets for 1 year before revaluing. I think the question actually had them owing the asset for 3 years (or was meant to be that) in which case the answer would in fact be C – 263,125)With all due respect, i am not insane, if i had the answers on the book i wouldn’t have asked you or anyone.
This Q was from my online mock, i had the final answer to the Q but i needed explanation.
Secondly, i didn’t mistype anything, i re-checked twice before submitting the Q. 🙂Nobody ever accused you of being insane.
If the answer does not show any working then I suggest you ask whoever you purchased the mock exam from.
Again, either there was a typing mistake in the question, or alternatively the answer is quite simply wrong. I have told you what the correct answer is to the question you have typed (and I assume that you are grateful for me taking the time!!!)
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