ACCOUNTING non-current asset Revalautions help

Please I need somebody to help me out answer or comment this difficult question. I am having difficulty to account the second year revaluation IAS 16 2012 see the question down, and I have no idea to account the investment property IAS40.

I have tried to answer it and many reviewers have said it is right accept the investment property.

so please just review or update it.

many thanks

Ballec PLC the year ending 31 December 2012

i) Machine B was purchased 13 June 2009 for £600,000 and estimated to have a 10 year useful life. Following a review of asset lives on 30 June 2012 the remaining estimated useful life was revised to 4 years.
ii) Building X and building Y were both purchased 5 years ago for £1m each and were estimated to have useful lives of 50 years at acquisition. Building X is used in the business of Ballance plc whereas building Y is an investment property. Ballance uses the fair value method as allowed by IAS40 to value investment properties.
As at 31 December 2011 both buildings were valued at £2m each and these valuations were reflected in the accounts for that year. Remaining useful lives of both buildings were revised to 50 years at that date.
At 31 December 2012 both buildings were valued at £2.5m each. These valuations are to be reflected in the accounts.
Ballance plc provides depreciation on a straight line basis charging one month depreciation for each complete month of ownership.

This is how I answered

First part II) £
Original cost 600000
Depreciation during 13/06/2009 to 31/06/2012 = 600000/10yrs = 60000 per year
Therefore 60000* 3yrs =180000 plus 6 months during 2012 = 60000* 6/12 =30000
Depreciation charger before change of useful life = 180000+30000 = £210000

Depreciation charge for the year
Cost 600000
Less Depreciation 210000
Carrying amount at 1/7/20012 390000

Remaining useful life 4 years

Remaining depreciation charge for the year 1/7/2012 to 31/12/2012= 390000/4 = 97500 * 6/12 = 48750

Finally total depreciation for the year 2012 = 60000*6/12 = 30000 + 48750 = 78750
Balance sheet ( 600000- 180000-75750) = 344250

Profit and Loss Account 75750

Part 2 Workings

II) Building X £000

Cost ( five years ago 1/1/2006 probably) 1000
Useful life 50yrs

Depreciation per year = 1000/50 =20 per year, so five years to 31/12/2011 = 20*5 = 100.

Revaluation takes place at the end of the year, so full year’s depreciation must be charged.

Carrying value at the revalued date ( 1000/50 *5) 900
Valuation non current asset 2000

Gain on revaluation 1100

Dr acc depreciation 100
Dr Building X 1000
Cr Revaluation 1100

Profit and loss Depn ( not sure) 100
Other statement of comprehensive income 1100
Statement of the financial position
Non-current asset:
(2000-100) = 1900

Equity:
Revaluation reserve 1100

All of the above has already been accounted, the reason I have calculated these are to find it out the balances of the acc depreciation and Building and revaluation reserve account.

This second part is the most important part which I really need to know, because I consulted with soo many books and source in the internet, they are all explaining how to account the first revaluation and the first year’s decrease of the asset’s cost but not double revaluations. According to this question they have revalued the building again in 31/12/2012. So I am not sure how I shall account this second revaluation which is not, according to the question reflected in the accounts.

OK now let’s start….

Depreciation for the year end 31/12/2012 = 2500/50 years = 50 per year
£000
Carrying value of the non-current asset at valuation date ( 2000-50) 1950
Valuation of non-current asset 2500

Gain on revaluation 550

Dr Building X 500
Dr ACC Depreciation 50
Cr Revaluation reserve 550

Reserve transfer

Historical cost depreciation ( 1000/50yrs) 20
Revaluation depreciation charge 50

Excess depreciation to be transferred 30

Statement of comprehensive income at 31/12/2012 ( P&l) £000
Depreciation charge 50

Other statement of comprehensive income:

Revaluation Gain 550

Statement of financial position Extract 31/12/2012
Non-current assets:
Building X ( 2500-50) 2450

Equity:
Revaluation reserve :
( remaining balance 1100+550-30) 1620

Statement of changes in Equity Extract
£000 £000

Balance at 31/12/2011 1100 –
Revaluation gain at 31/12/2012 550
Transfer (30) 30

Balance at 31/12/2012 1620 30

And finally Building Y investment building IAS 40

According IAS 40 it is measured at cost and changes in Fair value are recognised in the profit and loss account unlike IAS16 SO……

£000
Original cost ( five years ago) 1000
Fair value at 31/12/2011 2000

Gain in revaluation 1000

Credit profit and loss account 1000

Balance sheet 2000

These are also accounted in the company’s accounts.

Carrying value at 31/12/2012 2000
Revaluation at 31/12/2012 2500

Gains on revualtion 500

Credit profit and loss account 500

Balance sheet 2500

My questions if these are correct are we not depreciating the investment property..

The calculation are long and you know I am not a professional accountant, you may recalculate it and answer it in a more neatly and short cut way. Finally I am based in UK, and the questions are based on the IAS 16 and IAS 40.”