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Q: A freehold property originally costing $100,000 with a 50-year life has accumulated depreciation to date of
$20,000. The asset is to be revalued to $130,000 at 31 December 20X7.
Accumulated depreciation $20,000 (Debit)
Property at cost $30,000 (Debit)
Revaluation surplus $50,000 (Credit)
The depreciation is written off and the balance added to the cost of the property.
**** May I know why the depreciation need to be written off ?
Yes, when we revalue an asset we firstly remove all the previously charged depreciation to bring the asset back to its original cost before we then increase it to its revalued amount. So, here we remove the $20,000 to get back to the $100,000, which is effectively writing off the previous depreciation that has been charged.