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P2-D2.
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- November 29, 2020 at 3:50 am #596960
Derek purchased a property costing $750,000 on 1 January 20X4 with a useful life of 10 years. It has no residual value. At 31 December 20X4 the property was valued at $810,000 resulting in a gain on revaluation being recorded in other comprehensive income of $135,000. There was no change to its useful life. Derek does not make a transfer to realised profits in respect of excess depreciation on revalued assets. On 31 December 20X6 the property was sold for $900,000. Required: How should the disposal on the previously revalued asset be treated in the financial statements for the year ended 31 December 20X6?
sir i understand that one of the journal entries to be passed would be,
dr. revaluation surplus 135000 cr. retained earnings 135000
but which other general entry do we pass to record for the rest of gain of 270000-135000= 135000? as the total gain is of 270,000 upon disposal.
December 5, 2020 at 8:36 am #597711Hi,
We would need to record the proceeds and remove the PPE at its carrying value. The difference in these amounts is then posted through profit or loss as the profit on disposal.
Thanks
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