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could you please explain further on how you revalued the Land and Building? …
I revalued the building after the depreciation in prior yr.
being 4,500,000 to 5,400,000 = gain 900,000
and land from 500,000 to 600,000 = gain 100,000
charged both to Revaluation reserve. being £1,000,000
(please clarify; do both gains go to OCI? or just building OCI and Land to P/L)Also, i then depreciated for the building for remaining ;life of 45yr , being 120,000
a difference of 20,000 from original cost depn. of 100,000.
so this is then the transfer of revaluation reserve to retained earnings…of 20,000Im not sure if any of this would be right?
land does not get depreciated. and the revaluation on the land will always fluctuate,(usually appreciate) so therefore only gains or losses are recognised on sale of land.is my terminology wrong have i missed something please clarify. just slightly confused.
The above question seems as if it is asked for the tutor’s response. If you want to ask the tutor something directly please use the ask the tutor forum-
https://opentuition.com/forum/ask-acca-tutor-forums/ask-the-tutor-acca-financial-reporting-fr-exams/
Hope this helps.
in this part of question the carrying amount of building is 4500000 where as the revalued amount is 5400000 so the difference is 900000 which is a revaluation gain ,but on revaluation of an asset the amount of depreciation also increases therefore the increased amount of dep. that is (120000-100000) 20000 will be adjusted from revaluation gain and also 20000 will be transferred to retained earnings so the amount transferred to revaluation surplus will be 900000-20000 AND 20000 will be added to retained earnings .
Whereas, when it comes to land , land always appreciates and here it is too!
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