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IAS 16 PPE

Forums › Ask CIMA Tutor Forums › Ask CIMA F1 Tutor Forums › IAS 16 PPE

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • December 4, 2021 at 7:28 am #642451
    mayur3331
    Member
    • Topics: 1
    • Replies: 4
    • ☆

    Hi Chris,

    Thank you for your lecture series on F1. I was working out an example from my course book and am struggling out here. Please guide.
    Q. An entity purchased a property 15 years ago at a cost of $100,000 and has depreciated it at a rate of 2% per annum ,using straight line basis. The entity had the property professionally valued at $ 500,000.
    What is the revaluation surplus that would be recorded in the financial statements in respect of this property.

    My working

    Historic cost -100,000
    Depreciation – 2% @15 years- 2000*15=30,000
    Revaluation -500000.
    So carrying value has moved from (100,000-30,000)=70,000 to 500,000 hence difference is 430,000 to OCI hence the journal entry would be
    Dr. Asset- 400,000 (500K$-100K$)
    Dr. Accumulated depreciation 30,000
    Cr. Revaluation surplus 430,000

    The answer in the textbook is 530,000. Please help.

    December 11, 2021 at 12:01 pm #643912
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6440
    • ☆☆☆☆☆

    Hi,

    What text book are you using? From the information given and from your calculation then it looks to me like you have done this correctly.

    Thanks

    December 12, 2021 at 9:12 pm #644103
    mayur3331
    Member
    • Topics: 1
    • Replies: 4
    • ☆

    Hi Chris,

    Thank you for your help and revert. I am using kaplan Study text F1 and this question is from Test your understanding 6 and Q1.

    Thank you

    Regards

    Mayur

    December 27, 2021 at 8:34 pm #644934
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6440
    • ☆☆☆☆☆

    I think the answer for the first question should be the one that is given in answer number 2. Ignore the answer for Q1 where it says C and look at the one for Q2, where you will see that you are correct.

    Thanks

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