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In this question ans, The answer of depreciation and revaluation 40m. The 40 m building depreciation accumulated at 30.9.x3 must be written back. Why this written back.and what is the relationship between depreciation and revaluation surplus. Why revaluation surplus 25 don’t add back in cost of property plant
Hi
I don’t have the Kaplan revision kit – but I think I can anticipate the answer to your question.
When we have an asset which is being depreciated and then, later, it is revalued upwards from its net book value, are we in effect not saying that the depreciation which we have charged to date is too much? So, when we revalue an asset, the credit goes to the Revaluation Reserve and the debit goes to the Accumulated Provision for Depreciation Account.
If the revaluation increase exceeds the accumulated depreciation, then the amount by which it exceeds the depreciation is debitted to the asset account.
Hope that helps
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