[kartik123456]

Narration Historic cost Revaluation Reserve

For building

Cost (1Jan20x1) 30000
Less- Accumulated dep
(30000/30)*5 (5000)

Cost (1Jan20x6) 25000 75000 50000

Dep (75000/25) (1000) (3000) (2000)

72000 48000
Is this correct ??
The accounting entry in the solution is

Debit Building – Cost ( 75000 – 30000) 45000
Building – Accumulated dep 5000
Land – Cost 55000
Credit Revaluation surplus 105000

I am getting confused in the building part like i am getting 50000 on the reserve?
Please help me clear my doubt

Thank you

[kartik123456]

Hi, can anyone explain the meaning of effective rate of interest and why we use it.
Also what is the logic of using market rate of interest when dealing with convertible debentures. I am a little confused about understanding the concept of substance of a transaction.

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