Depreciation

Ok, forget the land for a second. The building cost, 10 years ago, 4,000. It has been depreciated by 10 / 50 ie by 800, so has a carrying value of 3,200. Land is not depreciated - what's its estimated useful life ? You'll be long gone before the land!

So, at the start of the year, we revalue the building to 6,000 and then depreciate it for this year by 1 / 40 * 6,000 = 150. The building is therefore now carried at 6,000 - 150 = 5,850

Plus the land at a value of 4,000 gives a total carrying value of 9,850

The double entry for the building revaluation is Dr Building accumulated depreciation account 800, Dr Building account 2000, Cr Revaluation reserve account 2,800

That leaves the Building account at 6,000, the Building accumulated depreciation account at zero and the Revaluation reserve account at 2,800

The land? It had a debit balance of 1,000 on acquisition. It has not been depreciated in the last 10 years. It has, at the start of the
this year, been revalued to 4,000. The double entry is, at the start of this year, Dr Land account 3,000 Cr Revaluation reserve account 3,000

At the year end, we have assets of 6,000 ( Building ) + 4,000 ( Land ) - 150 ( Building depreciation ) = 9,850 on the Statement of Financial Position and a credit balance on the Revaluation reserve account of 5,800

Is that clear?

thats great answer

thanks!