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Please could someone explain me how total revaluation 1,800,000 was calculated?
also why is the revaluation being deducted from buildings?:)
Land cost 1,000 valued at 1,200 = an increase of 200.
Buildings cost 4000, depn of 800, net book value of 3.200
Now valued at 4,800.
So, dr prov for depn 800 ( brings that down to zero ), and dr buildings 800 ( takes that up to 4,800 ) and credit revaluation reserve with 200 ( land ) + 1,600 ( buildings )
The revaluation is being deducted from buildings DEPRECIATION, not from buildings. See above explanation
Hi,
For Harrington…
I dont understand how we got the depreciation “revaluation” of (800) for buildings? shouldnt it be 80 (excess of depreciation on revaluation)? Is this an error in the text book?
any help would be great!
no, it’s not a misprint. The building had been depreciated by 800 up to the date of revaluation. On the event of revaluation, the initial accounting is to debit the accumulated depreciation account and credit the revaluation reserve. If there is a greater revaln than accum depn, then we need to debit TNCA and credit revaln reserve.
So, your query about the depn revaln of 800 for buildings is ( I hope ) explained!
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