- This topic has 4 replies, 2 voices, and was last updated 8 years ago by
.
- Posts
Let’s make a simple qs:
NCA at 2010 say building, Cost = 1,000,000$
Dep. on Straight line method: 2% per annum
At 2015, the NCA is revalued to 2,000,000$
No change in Depreciation method, the excess depreciation doesn’t not transfer to retained earning.
At 2020, that building was sold for 2,000,000$. (Assume all the transactions are occurred at the beginning of the year.)My Answer:
Depreciation 20,000$ (old)
Carrying Value at start of 2015 = 900,000$
Revaluation surplus = 1,100,000$
New Dep. = 22,000$
Carrying Value at the year of disposal = 990,000$
Profit from Sales of NCA = 2,000,000 – 990,000 = 1,010,000$Then my question:
What is the amount we report to the profit and loss statement?
What will we do with the Revaluation surplus?
Is there any effect on the statement of change in owner equity?Why on earth are you asking all of this?
Have you watched our free lectures? All of this is dealt with in our free lectures and so you cannot expect me to type them out here 🙂
Sorry John, but as I have watched your free lecture videos and the notes, You do have dealt with Disposal (Not for the Revalued Asset) and The Revaluation of NCA (without the sales of it).
Also thank you for your recommendation, I have watched, I do know I did wrong above on the Depreciation.
But I want to ask:
What if we sell the NCA that have been revalued, what will be the reported amount of profit/loss on sales of NCA on P&L Stmt? and
Is there any effect on the statement of change in owner equity?🙂
In the Statement of profit or loss we show the difference between the sale proceeds and the net book value (using the revalued figures).
Separately, the remaining balance in the revaluation reserve is then transferred to retained earnings (and this transfer does appear in the Statement of changes in equity).
(In future you must ask in the Ask the Tutor Forum if you wish for me to answer. This forum is for students to help each other 🙂 )
- You must be logged in to reply to this topic.