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I wish BPP would quote the actual acca exam from which these questions were pulled from in the mock exams!!
But if you find it I am having a hard time understanding where the 3.7m revaluation surplus is coming from? question says carrying amount is 9.2 million in 2005 and the property was sold for 11.5 in 2008 so profit of 2.3 million should go into the P/L. but no idea how they got 3.7 million for revaluation surplus.
thanks
I think that you have likely made an error in your typing of the post and, in particular, the dates
Can you check them for me please?
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Hi Mike,
Verdi question 3 in BPP mock 1.
Dates I have here is:
30 September Year end we are auditing.
29 Sep 2008-Building sold for $11.5m
September 2005- Building has last been revalued and had a carrying value of $9.2mand question mentions a revaluation surplus of 3.7m….
Do we know what was the profit on the sale on 29 September, 2008?
Do we know the company depreciation policy? ie is there depreciation to be charged in the year of sale? If not, then there will be no depreciation for the 364 days that the asset was owned in the period to 30 September, 2008
You say “question mentions a revaluation surplus of 3.7m”
What exactly does it say about the revaluation surplus?
hello ,
i would like to share my views here that 3.7 m is a revaluation surplus from the year september 20×5………..the question info says:
“”on 29 th september 20×8 verdi contracted to sell this building for 11.5 m.the building has last been revalued in september 20×5 and had a carrying value of 9.2 m at the date of sale .the gain on disposal has been credited to revenue and the balance of the rev.surplus relating to building ,3.7 m has been credited against other operating charges in the statement of profit or loss and other comprehensive income …””
the info in above is straightly given ,there is a problem in the accounting treatment they are puting gain in revenue and credit surplus in offset expenses which is incorrect accoding too ias 16 …ias 16 says any gain on disposal should be shown as a line item in p/l …
and for the rev.surplus whenever the asset is disposed rev surplus first should offset any rev loss in that respect in p/l and the remaiining should go in retained earnings ..since we do not have any rev loss informed so this 3.7 is gone to retained earnings …..one more thing to mention from ias 16 that revaluations gain under ias 16 goes to Other comp income portion ….
Thank you Adurich – Stafano, how can I answer questions when you give me less than half the relevant information?
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Hi Mike,
Apologies, I was actually going to put more information in before I saw Adurich’s reply. In the future any questions I have regarding something in the BPP mock exam(BPP does not reference Mock 1 and Mock 2 exam questions) I will put details in when asking. All other questions in the kite have a reference for the month and year for the exam from which the question is taken I don’t understand why they don’t do it for the Mocks.
Thanks Adurich….I see where i went wrong…. completely miss read the question, it was not clear to me the revaluation surplus was from 2005.
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