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depreciation

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › depreciation

  • This topic has 4 replies, 2 voices, and was last updated 9 years ago by Afrina.
Viewing 5 posts - 1 through 5 (of 5 total)
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    Posts
  • July 9, 2015 at 4:15 pm #260361
    persaud
    Member
    • Topics: 4
    • Replies: 6
    • ☆

    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

    July 9, 2015 at 5:08 pm #260397
    Afrina
    Member
    • Topics: 26
    • Replies: 37
    • ☆☆

    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.

    July 9, 2015 at 8:53 pm #260451
    persaud
    Member
    • Topics: 4
    • Replies: 6
    • ☆

    thank you afrina it help alot

    July 9, 2015 at 8:55 pm #260452
    persaud
    Member
    • Topics: 4
    • Replies: 6
    • ☆

    what is revaluation surplus

    July 10, 2015 at 5:47 pm #260498
    Afrina
    Member
    • Topics: 26
    • Replies: 37
    • ☆☆

    Persaud,

    Revaluation reserve:

    valuation equity account that is adjusted to a higher level, caused by an upward appraisal of capital assets and a resultant increase in the carrying value of such assets.

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