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Hi (Sir Mike little),
Sir my question is that till what time re supposed to transfer additional depreciation from revaluation reserve to retained earning…i read from somewhere that we re suppose to make transfer from revaluation reserve to retained earning till remaining life of asset,is it right?..if yes then will we continue to make (old) transfer from r reserve to r earning if asset again get revalue(either upward or downward) during its remaining life ??Eg Assets have total life of 5 years and asset gets upward revalue in year 2, then re we supposed to transfer additional dep. from r reserve to retained earning for the rest of three years ? ..if yes then what if asset again get Upward revalue in year 4, will we continue to make old transfer of additional dep (with respect to revaluation in year 2) from r reserve to retained earning in year 4,5 as well, along with new transfer of additional depreciation from r reserve to retained earning (wid respect to upward revaluation in year 4) ??
i am writing here for the first time kindly help me out .
Much regards.I’ve answered this! Where’s my answer gone?
I’ll be back – watching the rugby semi-final second half
I’m going to change your question a little bit
Asset cost $500,000 at start of year 1, 10 year estimated useful life
At end year 3, carrying value 350,000 it’s revalued to 560,000, so 210,000 goes to revaluation reserve
Year 4, 80,000 depreciation, carrying value 480,000, transfer from revaluation reserve to retained earnings 30,000, revaluation reserve now 180,000 (This transfer is recommended – it’s not a requirement!)
Years 5, and 6 same again 160,000 depreciation (total for 2 years) carrying value 320,000, transfer 60,000 (for 2 years) from revaluation reserve to retained earnings, revaluation reserve now 120,000
End year 6, revalue again to 400,000, revaluation reserve now 200,000
Year 7, 100,000 depreciation carrying value 300,000, transfer 50,000 from revaluation reserve to retained earnings, revaluation reserve now 150,000
Year 8, 100,000 depreciation carrying value 200,000, transfer 50,000 from revaluation reserve to retained earnings, revaluation reserve now 100,000
Year 9, 100,000 depreciation carrying value 100,000, transfer 50,000 from revaluation reserve to retained earnings, revaluation reserve now 50,000
Year 10, 100,000 depreciation carrying value zero, transfer 50,000 from revaluation reserve to retained earnings, revaluation reserve now zero
OK?
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