In which lecture do you discuss “transfer of excess depreciation on revaluation between revaluation surplus and retained earnings” ? I”m stuck on this question in exam kit? Thank you
love your lectures! in example 5, i paused the lecture to do it on my own and i did this, 3600000 – (1080,000+3600) = 2484000 so revaluation surplus = 3072000 – 2484000 = 588000
sorry, T accounts confuse me a lot at times, do you think it would be asked for me to present this in T account form only in the exam or is it better for me to understand it the way i did above?
I’m not sure if I missed it, But I haven’t noticed you mentioning the Useful Economic Life for the Building either in your lecture or In the notes/question. I was only able to find it in your Answer on Pg 134.
I also found it difficult to calculate the depreciation charge for the 2nd half of the year (1 JUL – 31 DEC) since you didn’t mention this in your lecture.
However, Could you please be kind enough to explain how you arrived at “$44,522” as the Depreciation charge, The Value of “$72,000” & why we divided “1,116,000 ÷ by 72,000”.
Before the revaluation, the depreciation charge was 2% x 3,600,000 = 72,000 per year, and the expected useful life for 2% a year was 50 years.
The accumulated depreciation was 1,080,000 and so they must have owned it for 1,080,000/72,000 = 15 years, It was revalued 6 months later, by which time they had owned it 15.5 years, and so the remaining life is then 50 – 15.5 = 34.5 years.
I’m not sure if I missed it, But I haven’t noticed you mentioning the Useful Economic Life for the Building either in your lecture or In the notes/question. I was only able to find it in your Answer on Pg 134.
I also found it difficult to calculate the depreciation charge for the 2nd half of the year (1 JUL – 31 DEC) since you didn’t mention this in your lecture.
However, Could you please be kind enough to explain how you arrived at “$44,522” as the Depreciation charge, The Value of “$72,000” & why we divided “1,116,000 ÷ by 72,000”.
I have seen accountants expensing/reducing upward revaluation reserves in future years.Is this correct? Upon asking reply received is its not the actual profit so can’t show in books?
For ex: Say £500K upward revaluation being expensed as 50K for next 10 yrs.
As explained in the lectures. depreciation is charged on the revalued amount, and the excess over the ‘new’ depreciation and the ‘original’ depreciation may be transferred each year from the revaluation reserve to retained earnings (which is the same effect as what you have written).
Could you please help me to refer any videos or notes to go through charity accounting/Not for profit as its slightly different from pvt and public limited org. Moreover its not covered anywhere in ACCA , CIMA or anywhere.
First and foremost thank you and OpenTuition team for providing a great learning platform for ACCA aspirants.
May I request you to please provide further explanation on your above comment that depreciation is charged on the revalued amount, and the excess over the ‘new’ depreciation and the ‘original’ depreciation may be transferred each year from the revaluation reserve to retained earnings
Does it mean that post revaluation, each subsequent year we have to keep calculating difference in depreciation charge as per original cost and depreciation charge on revalued cost and then transfer the difference to revaluation reserve till it becomes zero.
The transfer of the change in depreciation from the rev. reserve to the retained earnings, is this for the 1st year only? or would you have to do this for every year after too?
alll says
In which lecture do you discuss “transfer of excess depreciation on revaluation between revaluation surplus and retained earnings” ?
I”m stuck on this question in exam kit?
Thank you
John Moffat says
In the lectures on limited companies.
rimshaaaaa says
love your lectures!
in example 5, i paused the lecture to do it on my own and i did this,
3600000 – (1080,000+3600) = 2484000
so revaluation surplus = 3072000 – 2484000 = 588000
sorry, T accounts confuse me a lot at times, do you think it would be asked for me to present this in T account form only in the exam or is it better for me to understand it the way i did above?
ashif94 says
Hello John, I’m little bit confused about this video. Could you please give me the double entries?
John Moffat says
You can see all of the double entries in the printed answer in the free lecture notes 🙂
L.Thenuka says
Dear John,
I’m not sure if I missed it, But I haven’t noticed you mentioning the Useful Economic Life for the Building either in your lecture or In the notes/question.
I was only able to find it in your Answer on Pg 134.
I also found it difficult to calculate the depreciation charge for the 2nd half of the year (1 JUL – 31 DEC) since you didn’t mention this in your lecture.
However,
Could you please be kind enough to explain how you arrived at “$44,522” as the Depreciation charge, The Value of “$72,000” & why we divided “1,116,000 ÷ by 72,000”.
Thank You!
John Moffat says
Before the revaluation, the depreciation charge was 2% x 3,600,000 = 72,000 per year, and the expected useful life for 2% a year was 50 years.
The accumulated depreciation was 1,080,000 and so they must have owned it for 1,080,000/72,000 = 15 years,
It was revalued 6 months later, by which time they had owned it 15.5 years, and so the remaining life is then 50 – 15.5 = 34.5 years.
L.Thenuka says
Dear John,
I’m not sure if I missed it, But I haven’t noticed you mentioning the Useful Economic Life for the Building either in your lecture or In the notes/question.
I was only able to find it in your Answer on Pg 134.
I also found it difficult to calculate the depreciation charge for the 2nd half of the year (1 JUL – 31 DEC) since you didn’t mention this in your lecture.
However,
Could you please be kind enough to explain how you arrived at “$44,522” as the Depreciation charge, The Value of “$72,000” & why we divided “1,116,000 ÷ by 72,000”.
Thank You!
praveenmasih says
I have seen accountants expensing/reducing upward revaluation reserves in future years.Is this correct?
Upon asking reply received is its not the actual profit so can’t show in books?
For ex: Say £500K upward revaluation being expensed as 50K for next 10 yrs.
Thanks.
John Moffat says
As explained in the lectures. depreciation is charged on the revalued amount, and the excess over the ‘new’ depreciation and the ‘original’ depreciation may be transferred each year from the revaluation reserve to retained earnings (which is the same effect as what you have written).
praveenmasih says
Thank you John.
Could you please help me to refer any videos or notes to go through charity accounting/Not for profit as its slightly different from pvt and public limited org. Moreover its not covered anywhere in ACCA , CIMA or anywhere.
Any guidance will be highly appreciated.
Thanks.
Moinn says
what lecture would that be? as Depreciation on evaluation was not covered in this one.
John Moffat says
As I do state in the lecture, it is covered in the lectures on Accounting for Limited Companies, because it is only applicable to limited companies.
khorasiaasif@gmail.com says
Greetings John,
First and foremost thank you and OpenTuition team for providing a great learning platform for ACCA aspirants.
May I request you to please provide further explanation on your above comment that depreciation is charged on the revalued amount, and the excess over the ‘new’ depreciation and the ‘original’ depreciation may be transferred each year from the revaluation reserve to retained earnings
Does it mean that post revaluation, each subsequent year we have to keep calculating difference in depreciation charge as per original cost and depreciation charge on revalued cost and then transfer the difference to revaluation reserve till it becomes zero.
Appreciate your kind inputs
John Moffat says
Yes, that is what it means 🙂
nedders says
Hi, what about the part of looking at the new depreciation, and moving the excess from the revaluation surplus to the retained earnings?
John Moffat says
That is explained in the lectures.
nedders says
The transfer of the change in depreciation from the rev. reserve to the retained earnings, is this for the 1st year only? or would you have to do this for every year after too?
John Moffat says
Every year.