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Q138 from Kaplan Exam Kit(September 2019 to August 2020)
on 31 january 20X8, Westwale Co disposed of a building for $450,000.The building accounted for using the revaluation model.At the date of disposal after deduction of accumulated depreciation of $90,000, the buildinghad a carrying amount of 310,000. It also had a revaluation surplus in equity of 30,000What was Westvale Co’s profit on disposal of the building for inclusion in the statement of profit and loss for the year ended 31 December 20X8?
Hello, Can anyone help me out in this question please I would be very thankful its my exam tomorrow need the explanation in urgent. THANKYOU
Q138 from Kaplan Exam Kit(September 2019 to August 2020)
on 31 january 20X8, Westwale Co disposed of a building for $450,000.The building accounted for using the revaluation model.At the date of disposal after deduction of accumulated depreciation of $90,000, the buildinghad a carrying amount of 310,000. It also had a revaluation surplus in equity of 30,000What was Westvale Co’s profit on disposal of the building for inclusion in the statement of profit and loss for the year ended 31 December 20X8?
Please do not expect instant replies. We do not sit in front of the computer permanently, but will answer within 24 hours (and it is not yet 24 hours since you first question!!).
You must have an answer your Exam Kit, so please ask about whatever it is in the answer that. you are not clear about.
Hello sir, as required in this question we have to calculate the profit on disposal and normally we calculate it as proceeds on disposal of non current asset less the carrying value of asset sold i.e.
$450,000 – $310,000 = $140,000
But the answer in the kit is $50,000 which i m not getting, what’s wrong in this solution please let me know
And sorry as i asked for a fast reply will wait now thankyouAssuming that you have typed the details correctly (I do not have the Kaplan book and so I cannot check myself) then it appears they have made a mistake.
The profit on sale is calculated as 450,000 – 310,000 = 140,000.
The revaluation surplus of 30,000 is then transferred to retained earnings because it has now been realised and is therefore now distributable.
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