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hi sir please help me
a company bought a property 4 yrs ago on 1 jan for 170000 since then property price have risen substantially and the property and the property have been revalued at 210000
the property was estimated as having a useful life of 20 yrs when it was purchased what is the balance on the revaluation surplus reported in the statement of financial position
Hi!
Ans:
The company purchased $ 170,000 4 years ago, having the total years of useful life of 20 years. So remaining useful life before revaluation is 16 yrs.
New CV = $170,000 x 16/20 yrs = $ 136,000
So, ur Revaluation surplus = $ 210,000 – 136,000 = $ 74,000
Alternative way u can do this:
Purchase 4 years ago $170,000
Useful life of 20 years, depreciation = 170,000/20 = $ 8500
Accumulated Dep’n for 4 yrs = $ 8500 x 4 = $ 34,000.
NBV / CV = $ 170,000 – 34,000 = $ 136,000
Therefore, revaluation surplus = $ 210,000 – 136,000 = $ 74,000
Hope this helps.
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