- This topic has 3 replies, 2 voices, and was last updated 1 year ago by
.
- Posts
ABC company has purchased an asset of $100,000 with useful life of 10 years on 1 Jan 2010 but then the value of assets was revalued to $120,000 on 30 june 2012.
Depreciation (1.1.2010 – 30.6.2012):
$20,000 + ($100,000 / 10) × 6/12 = $25,000NBV = 100,000 – 25,000 = $75,000
Gain on revaluation = $45,000
Accounting entry for revaluation:
DR Machine $100,000
CR Accumulated depreciation $25,000
CR Revaluation gain $45,000I messed up the accounting entry ( i guess) plus i don’t know what amount we would include in revaluation surplus as equity item in SOFP and what amount we would be used to record in gain on revaluation in SOPL?
The correct double entry is:
Dr Machine 20,000 (to increase the value from 100000 to 120,000).
Dr Accumulated depreciations 25,000 (to remove the current balance)
Cr Revaluation reserve 45,000.The 45,000 appears on the SOFP.
It does not appear in the SOPL but does appear as an extra line at the bottom of the Statement of Comprehensive Income.Why are you attempting a question for which you do not have an answer?
Thanks a lot! 🙂
But i require a little correction, the double entry for revaluation reserves of $45,000 will be used to record the amount in both the SOFP and OCI respectively. We will record in the SOFP as revaluation reserve as well as in OCI as gain on revaluation?
IF i remember correctly then you said previously that the gain on revaluation is recorded in OCI is because it is an unrealized profit (meaning not recognized) – BUT when the cash will be received at the time of sale then we will recognize it in SOPL as other income, is that correct?
IF there is a revaluation another time of let’s say $20,000 then how do we record this in both of our Financial statements meaning SOFP and OCI?
In SOFP, it will appear a standing balance of revaluation reserve at $65000 (45000+20000) while we will record the gain on revaluation of $20,000 for that period, is that correct?
I appreciate your efforts. So Thanks ?
- The topic ‘Need your help here!!!’ is closed to new replies.