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Question about Non-current asset (please help)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Question about Non-current asset (please help)

  • This topic has 0 replies, 1 voice, and was last updated 12 years ago by pandaki.
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  • Author
    Posts
  • June 10, 2010 at 10:06 am #44583
    pandaki
    Member
    • Topics: 4
    • Replies: 12
    • ☆

    Broadoak acquired a 12 year lease on property on 1 Oct 20X0 at the cost $240,000. The company policy is to revalue its property to their market values at the end of each years.
    Accumulated amortisation is eliminated & the property is restated to the revalued amount. Annual amortisation is calculated on the carrying values at the beginning of the year. The Market values of the property on 30 September 20X1 & 20X2 were $231,000 & 175,000 respectively. The existing balance on the revaluation surplus at 1 Oct 20X0 was $50,000. This related to some non-depreciation land whose value had not changed significantly since 1 October 20X0.

    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXxx

    Answer :

    Statement of Financial Position as at 30 September 20X1

    Leasehold >>>>>>>>>>>>231,000

    Revaluation surplus:

    Balance as at 1 Oct 20X0>>>>50,000
    Revaluation Gain>>>>>>>>>>>>11,000
    >>>>>>>>>>>>>>>>>>>>>>>>>>>


    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>61,000
    Transfer to retained
    earning (11,000 x 1/11)>>>>>>(1,000)
    Portion of revaluation loss>>(10,000)
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>50,000

    Working:

    Cost at 1 October 20X0>>>>>>>>>240,000
    Amortisation 30 Sept 20X1 >>>>>(20,000)
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>220,000
    Revaluation gain >>>>>>>>>>>>>>>>>11,000
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>231,000
    Amortisation to 30 Sept 20X2>>>>>(21,000)
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>210,000
    Revaluation loss to revaluation
    surplus>>>>>>>>>>>>>>>>>>>>>>>>>>>(10,000)
    Revaluation loss to
    income statement>>>>>>>>>>>>>>>>>>>(25,000)
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


    ‘

    carrying amount 30 Sept 20X2 >>>>>>>>175,000

    My Question is why need transfer $1,000 to retained earning in statement of financial postion ? The second question, please refer to working , why Revaluation loss to revaluation surplus is 10,000, but not 11,000 ?

    Please help Thanks alot. 🙂

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