[Dee1202]

Got it! So, this is how it looks:

What I have done in the second journal:

Dr. Accumulated Dep A/c (This reverses the Accumulated Dep as per the Elimination method)
Cr. PPE A/c (This reduces the Carrying value of the asset further)

What should have been done:

Dr. Accumulated Dep A/c (This reverses the Accumulated Dep as per the Elimination method and takes the carrying value of PPE to its original amount which was 8 mil) – 2 mil
Cr. Revaluation Surplus A/c (This transfers this to revaluation account) – 2 mil

Dr. PPE A/c (Increases the value of PPE by the diff between 12 mil and 8 mil) – 4 mil
Cr. Revaluation Surplus A/c (This gets transferred to the revaluation surplus A/c) – 4 mil

Now since the Revaluation Surplus = (Overall property FV – Overall property carrying value) = 20mil – 8 mil = 12 mil

The Balance on Revaluation Surplus Account will now also be equal to 12 mil.

Thank a lot!

Do let me know if my understanding is in any way incorrect.

[Author]

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