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BPP KIT page # 54
8.19Dear sir,
I’m confused, why 18,000 is subtracted from 810?
where it comes from ??$1,600,000 x 2% x 5 years = $160,000
1600-160 = 1440
2250 – 1440 = 810
2250/45 = 50,000
$50,000 is the annual depreciation calculated on the revalued amount. The depreciation on the original cost is 2% x 1,600,000 = $32,000.
The excess of 50,000 – 32,000 = 18,000 may be transferred from the revaluation surplus to retained earnings (to make it distributable).
I do explain this in my free lectures on limited companies.
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