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Trial balance extracts for year ended 31 March, 2011
Land and buildings at cost 270,000
Plant at cost 156,000
Accumulated depreciation to 31 March 2010
Building 60,000
Plant 26,000
Rental of leased plant 22,000The land and buildings were purchased on 1 April 1995. The cost of the land was $70 million. No land and buildings have been purchased
by Kala since that date. On 1 April 2010 Kala had its land and buildings professionally valued at $80 million and $175 million respectively.
The directors wish to incorporate these values into the financial statements. The estimated life of the buildings was originally 50 years and
the remaining life has not changed as a result of the valuation.m not understanding the part how we have got
DR Revaluation reserve 1,000
CR S of Comp Inc 1,000.can you please explain ?
Surely this is an annual transfer (encouraged but not required) from revaluation reserve to retained earnings to compensate retained earnings for having to suffer the excess depreciation charge this year (and every year) subsequent to the revaluation
Better?
So the entry should be
DR Revaluation surplus (SoFP) 1000
CR Retained earning (SoFP) 1000Why do you use the line CR Sofcomp Inc?
Thanks
If you accept that the revaluation itself should go through Comprehensive Income (and thence into statement of changes in equity) then surely the transfer from revaluation reserve to retained earnings should also go through Comprehensive Income (and also into statement of changes in equity)
OK?
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