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Hi sir,
Sorry if this might be a silly question, but I just started with F7 and got quite confused on revaluation upward entries.
With your example 1 in the video lecture, the entries we would need include:
– DR Cost, DR Accum. Depreciation, CR Reval. Reserve for the revaluation.
– DR Depreciation expense, CR Accum. Depreciation for the new depre. value.
– DR Reval. Reserve, CR Retain earnings for the excess depreciation transfer.The textbook from BPP records a similar example as below:
– DR Accum. Depreciation (total depre to date)
DR Carrying amount (revalued amount – original cost)
CR Other comprehensive income (reval.surplus)
– same for the transfer.Do these journals have any differences please? BPP way seems to reverse the accum.depre but I don’t see where is the new depreciation amount recorded?
Thank you in advance.
Hi,
The BPP entry for the revaluation is the same except that they have said carrying amount as opposed to cost. I would always take this entry to the cost but it doesn’t really matter as long as you are increasing the value of the asset being revalued.
Enjoy the rest of the course!
Thanks
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