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Hi, I have a question about the entries for this adjustment.
Included within Ppe is building with carrying value of 9 million. On 1 November 20X7 revalued to 12 million. Building had estimated life of 25 years when purchased 10 years prior to revaluation date. Not changed as a result of revaluation. Directors wish to incorporate value in financial statements for year ended 31 October 20X8.
From the Carrying value of 9 million,I got to an original cost of 15 million after I reversed the accumulated depreciation of 6 million by using 9 million / (15/25).
So I am a little confused with the entries Will it be:
Dr Accumulated Depreciation 6 million
Cr Nca 3 million as it has lost 3 million in value
Then would you impaired the remaining 3 million as there is an impairment lost?
Dr Impairment 3 million
Cr Nca 3 million.Or would the entries be Dr accumulated depreciation 6 million
Cr nca 3 million
Cr Revaluation surplus 3 millionThen calculate the new depreciation charge using the 12 million asset for the fifteen years remaining.
What’s the matter with Debit Accumulated Depreciation $3m, Credit Revaluation Reserve $3m?
@mikelittle said:
What’s the matter with Debit Accumulated Depreciation $3m, Credit Revaluation Reserve $3m?As it has depreciated from 15 m cost to a 9 m carrying value.
Would the entries not be the same as post 2
Where to remove acc depn it be Dr Accumulated Depreciation 6 m
Cr Nca 3 m
Cr Revaluation Reserve 3 mBecause I think that my entry is the correct one.
Whichever way you do it there should be an adjusted balance on Accumulated Depreciation Account of $3m to carry forward
@mikelittle said:
Because I think that my entry is the correct one.Whichever way you do it there should be an adjusted balance on Accumulated Depreciation Account of $3m to carry forward
Sorry for all the questions.
So for that question, what would the entries be when we revalued the asset to 12million?Is this not like Q10 on this technical articles:
https://www.accaglobal.com/uk/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/ppe.html
https://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/ias16_solutions.pdf@mikelittle said:
Because I think that my entry is the correct one.Whichever way you do it there should be an adjusted balance on Accumulated Depreciation Account of $3m to carry forward
Even if the asset has fallen from a cost of 15 million to a carrying value of 9 million and then revalued at 12 million?
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