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Hi, The gain on disposal should be calculated based on the revalued figure less depreciation or Historic cost less depreciation? thanks
The gain on disposal is calculated by comparing the proceeds to the carrying value of the asset. The carrying value will be that of the revalued asset.
is the correct journal entry the following please: Dr. Revaluation surplus 120,520 Cr. Retained earning 120,520 please confirm
Yes, this is correct.
In an exam it would specifically say what to do. If it didn’t then I’d assume they do have the policy as it is beneficial to the shareholders to do so given it increases their distributable reserves.
My understanding is that the entity has a choice whether to transfer the depreciation difference from RS to RE or not.
However in your example it seemed you just did it anyway without explicitly stating that this is the entity’s policy. What shall I do in an exam situation?
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