Q: Carter Co vacated an office building and let it out to a third party on 30 June 20x8. The building had an original cost of $900,000 on 1 Janauary 20x0 and was being depreciated over 50 years. It was judged to have a fair value on 30 June 20x8 of $950,000. At the year-end date of 31 Decemeber 208 the fair value of the building was estimated at $1.2 million.
Carter Co uses the fair value model for investment property.
What amound will be shown in revaluation surplus at 31 Decemebr 20x8 in respect of building?
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Hi,
I am not sure why the increase between 30.6.x8 and 31.12.x8 will be credited to profit or loss when the increase between 01.01.x8 will be shown in the revaluation surplus.
Ask the Tutor ACCA FR
BPP revision kit 32
4y ago#1Hi,
It is because there is a change in use of the property. It was originally PPE when it was being used as an office building. Once they had vacated the building a started to lease it out then it became investment property.
Thanks.
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