Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › BPP Revision kit Q26 – Revaluation surplus
- This topic has 1 reply, 2 voices, and was last updated 6 years ago by MikeLittle.
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- April 9, 2018 at 8:43 pm #445847
Good evening Mike,
My question is regarding revaluation surplus:
Carter vacated an office building and let it out to a third party on 30 June 20×8.
The building had an original cost of $900,000 on 1 January 20×0 and was being depreciated over 50 years. It was judged to have a fair value on 30 June 20×8 of $950,000.
At the year end date of 31 December 20×8 the fair value of the building was estimated at $1.2 million.
Carter uses the fair value model for investment property.
What amount will be shown in revaluation surplus at 31 December 20×8 in respect of this building?In the solution they used 950,000 fair value. I am just wondering why the 950,000 was used and not the $1.2 M?
Could you please kindly explain the rule behind?
I have no problem to calculate the depreciation.Thanking you in advance.
Kind regards,
KatalinApril 9, 2018 at 9:06 pm #445850The event that triggers the calculating the revaluation is the decision to change the status of the building from own-use to investment property
So the revaluation takes place on 30 June
And change subsequent to that date will be reflected through the Statement of Profit or Loss because “Carter uses the fair value model for investment property”
I imagine that that explains the rule … does it?
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