- This topic has 1 reply, 2 voices, and was last updated 1 year ago by .
- You must be logged in to reply to this topic.
Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
Hi there, I’m a bit confused on the following;
Retained earnings in the SOFP is a credit account? so when excess depreciation is transferred and Dr Revaluation Surplus and Cr Retained earnings, isn’t this increasing Retained Earnings?
If depreciation is an expense wouldn’t it reduce profit?
In future you must ask in the Ask the Tutor Forum is you want me to answer. This forum is for students to help each other.
Depreciation is an expense and so the total depreciation amount will have been charged to the SOPL and will have reduced profit.
The transfer is a separate issue, Both the retained earnings and the revaluation surplus are amounts owing to the shareholders. All the transfer is doing is making some of the revaluation surplus distributable as dividends (the revaluation surplus is a capital reserve and cannot be distributed as dividend).
This is all explained in my free lectures.