PROPERTY,PLANT AND EQUIPMENT 2

An entity revalued its land and buildings at the start of the year to $60 million ($15 million for the land). The property cost $30 million ($6 million for the land) ten years prior to the revaluation. The total expected useful life of 40 years remained unchanged. The entity's policy is to make an annual transfer of realised amounts to retained earnings. Show the effects of the above on the financial statements for the year. ANS (W1) Land Buildings Total Cost 6,000 24,000 30,000 Depreciation (10/40) (6,000) (6,000) –––––– –––––– –––––– Carrying amount 6,000 18,000 24,000 Good day,Please can you explain why the depreciation for building was calculated as 10/40 and not 1/40 as they give different answers. Thank you