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Durzo, an entity, has the following building in its FS at 30 june 2008:
Cost – $2,400,000
Accumulated dep – $600,000
Net book value – $1800,000It has been decided to revalue the property to $3,600,000 on 1 July 2008.
What is the double entry to record the above revaluation?DR: Building (Asset) $ 1,800,000
CR: Revaluation Reserve (Equity) $ 1,800,000
(Being revaluation of asset)@dizzycats said:
DR: Building (Asset) $ 1,800,000
CR: Revaluation Reserve (Equity) $ 1,800,000
(Being revaluation of asset)Dizzy Cats,..
Wouldn’t the double entry be like:
Dr: Building 1,200,000
Dr: Accumulated Dep 600,000
Cr: Revaluation Reserve 1,800,000Revaluation gain amount of 1,800,000 is arrived by deducting the revalued amount of 3,600.000 from NBV of 1,800,000 = 1,800,000 Revaluation gain.
It can also be calculated as 3,600,000 – 2,400,000 (being the cost difference) plus the accumulated depreciation of 600,000 = 1,800,000
Debiting the Asset account with 1,800,000 would increase the asset balance to 2,400,000 + 1,800,000 = 4,200,000 and I believe that is wrong!
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