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On 1 January 2010, Jerry Ltd bought freehold property for £800,000. This figure was
made up of land £300,000 and buildings £500,000. The land was non-depreciable but it
was decided to depreciate the buildings on the straight-line basis, assuming a useful life
of 40 years and a residual value of £nil. On 1 January 2020, the land was revalued at
£400,000 and the buildings were revalued at £450,000. The company decided to
incorporate these valuations into its accounts. The previous estimates of the buildings’
useful life and residual value remain unchanged.
Write journal entries for the revaluation of Jerry Limited’s freehold property on 1
January 2020. Also calculate the amount of depreciation which should be charged in
relation to the buildings for the year to 31 December 2020.
Can anyone help??????
I’d happily help but you need to show me that you have at least attempted the question first, or explained what part of it you do not understand. Let me know how you get on and then I’ll answer things for you.
Remember the gain on revaluation goes through OCI and the depreciation is based on the revalued amount over the remaining useful life.