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Q)A freehold property originally costing $100,000 with a 50-year life has accumulated depreciation to date of
$20,000. The asset is to be revalued to $130,000 at 31 December 20X7.Which set of double entries is required to record the revaluation ?
DR Accumulated depreciation $20,000 /CR Revaluation surplus $20,000
DR Property at cost $50,000 ICR Revaluation surplus $50,000
DR Accumulated depreciation $20,000
DR Property at cost $30,000 /CR Revaluation surplus $50,000DR Revaluation surplus $50000/CR Accumulated depreciation $20,000
CR Property at cost $30,000A)DR Accumulated depreciation $20,000
DR Property at cost $30,000 /CR Revaluation surplus $50,000Why are we writing off the acc. dep from the rev surplus?
Because when we revalue an asset, the first element of the revaluation goes against Accumulated Depreciation – after all, it represents too much depreciation charged in the past years
After this entry has been put through we finish up with Asset $130,000, Accumulated Depreciation $Nil, Carrying Value $130,000
And that’s what we wanted, isn’t it?
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