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lusan
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A company revalued its land and buildings at the start of the year to $10million ($4m for the land ) . The property cost $5million ($1m for the land ) ten years prior to the revaluation . The total expected useful life of 50years is unchanged . The company’s policy is to make an annual transfer amounts to retained earnings . Show the effect of the above on the financial statements for the year.
my confusion is:
depreciation calculation=4/50 i.e 0.08 this is only of 1 year, if multiplied 0.08*10 is 0.8, please if you can clarify?
P2-D2
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Hi,
Yes, your calculation of the depreciation prior to the revaluation is correct. The building of $4million would have been depreciated over the 50 years, and the accumulated depreciation to the date of the revaluation would have been for 10 years.
Thanks
lusan
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