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01Jan08 building valued $100
Economic life 20yrs
Depn method: straight line
Nil residual31Dec08 revalued downwards $91.2
31Dec09 revalued $91.8What are the revaluation adjustment at 31Dec08 and 31Dec09?
Could anyone help me handle this questions as the example in the text book did not give instruction on decrease revaluation?
Hi @Vu,
At 31Dec08 NBV = $95 ($100 less one-year depreciation $5).
Write down to $91.2:
Dr P&L expenses – e.g. writing down of the assets $3.8 (difference between $95 and $91.2)
Cr SOFP – building’s cost $3.8At 31Dec09 NBV = $86.4 ($91.2 less one-year depreciation $4.8)
Revalue to $91.8 in two steps – total amount for increasing amount is $5.4 (difference between $91.8 and $86.4)
1. As there were previously written down amount of $3.8, reverse through P&L:
Dr SOFP – buildin’s cost $3.8
Cr P&L – reversal of writing-down $3.82. The rest of amount $1.6:
Dr SOFP – building’s cost $1.6
Cr Equity – revaluation reserve $1.6
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