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There a sentence in question that : A qualified surveyor has valued the land and buildings at 31 March 2009 at 180 $ Million.
My qusetion is how shoul I spread this revaluation between building and land?Here is the full quetsion:
Draft financial statements extracts as at 31 March, 2009.
Property at valuation
Land 20,000
Buildings 165,000
Plant 180,500
Investments at fair value through profit and loss at 31 March, 2008 12,500
The non-current assets have not been depreciated for the year ended 31 March 2009.
Dexon has a policy of revaluing its land and buildings at the end of each accounting year. The values in the above statement of financial
position are as at 1 April 2008 when the buildings had a remaining life of fifteen years. A qualified surveyor has valued the land and
buildings at 31 March 2009 at $180 million.
Plant is depreciated at 20% on the reducing balance basis.
The investments at fair value through profit and loss are held in a fund whose value changes directly in proportion to a specified market
index. At 1 April 2008 the relevant index was 1,200 and at 31 March 2009 it was 1,296.I don’t believe that we need to know that split in order to be able to prepare the answer
Depreciation on the buildings for the year to March 2009 is $165,000 / 15 = $11,000
So after depreciation we have land at $20,000 and the building at $154,000, a total of $174,000
And the valuer has valued at $180,000 so we have a credit to revaluation reserve of $6,000
Ok?
Many Thanks Mike!!! You helped me a lot.
But i have one more question regarding this questionThe investments at fair value through profit and loss are held in a fund whose value changes directly in proportion to a specified market
index. At 1 April 2008 the relevant index was 1,200 and at 31 March 2009 it was 1,296.Could you please explain about indexes? or is there any explanation in OT notes, becuase i didn’t met.
Thanks in advance!!!!
The index, as it moved from 1200 to 1296 has risen by 96 and 96 is 8% of 1200
So those FVTPL investments will also have risen by 8%. You need to calculate 8% of the brought forward value of the investments and then increase the investment value on the statement of financial position and credit the statement of profit or loss by that increase in value
There will (probably) be a lecture involving indexes in either F2 or in F5
Ok?
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