During the year the company redesigned its display areas in all of its outlets. The previous
displays had cost $10 million and had been written down by $9 million. There was an
unexpected cost of $500,000 for the removal and disposal of the old display areas. Also
during the year the company revalued the carrying amount of its property upwards by
$5 million, the accumulated depreciation on these properties of $2 million was reset to
zero. All depreciation is charged to operating expenses....
I am not understanding the treatment of accumulated depreciation in relation to revaluation . What does it explains ?
Ask the Tutor ACCA FR
cash flow
Use T accounts!
What this appears to be saying is that, of the $5 million credit to the revaluation reserve, $2 million has been debited to the property accumulated depreciation account and $3 million debited to the property account
Makes sense now?
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