- This topic has 3 replies, 3 voices, and was last updated 4 years ago by
.
- Posts
Please, help to understand: On 1 January 2018 Baker Co revalued its property to $100000. At the date of the revaluation the asset was accounted for at cost of $80000, and had accumulated depreciation $16000. The property had useful life of 50 years from the date of purchase and no residual value. What amount of excess depreciation could be transferred from revaluation surplus to retained earnings at 31 December 2018 as a result of accounting for the revaluation?
Have you not watched my free lectures on this? (The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Also, why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they are full of exam standard questions and have answers and explanations) 🙂The depreciation will have been calculated in the past on the original cost of $80,000.
After the revaluations, depreciation will be calculated on the revalued amount of $100,000.
The difference between the new depreciation and what the depreciation would have been had they not revalued can be transferred from the revaluation reserve to retained earnings (for reasons that I do explain in my lectures).
Hi John
Would the answer be 900 ?
As there is accumulated depreciation off 16,000, 10 years have passed
the depreciation on the revalued amount would be 100,000/40 = 2500
Excess depreciation is 2500 – 1600 = 900
- The topic ‘Revaluation’ is closed to new replies.