• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

June 2025 ACCA Exam Results

Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for June 2025 exams.
Get your discount code >>

Revaluation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Revaluation

  • This topic has 6 replies, 2 voices, and was last updated 4 years ago by maximus07.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • June 30, 2021 at 2:53 am #626654
    maximus07
    Participant
    • Topics: 446
    • Replies: 437
    • ☆☆☆☆

    Banjo Co. purchase a building on 30 June 20X8 for $1250,000. At acquisition, the useful life of the building was 50years. Depreciation is calculated on the straight line basis. 10years later, on 30 June 20Y8 when the carrying amount of the building was $1,000,000, the building was revaluated to $1,600,000. Banjo Co. has a policy of transferring the excess depreciation on revaluation from the revaluation surplus to retained earnings.

    Assuming no further revaluation take place, what is the balance on the revaluation surplus at 30June 20Y9?

    Answer is $585,000

    Why accumulated depreciation (as per old depreciation) is not first subtracted from Revaluation surplus before entering into excess of depreciation calculation?

    June 30, 2021 at 7:20 am #626675
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    At the date of revaluation (30 June Y8), there is a revaluation surplus of $600,000 (the difference between the revalued amount and the carrying value/net book value).

    The depreciation for the year to 30 June Y9 is calculated on the revalued amount and is therefore 1,600,000/40 = $40,000. Had there not been a revaluation, the depreciation would have been 1,250,000/50 = $25,000.

    The excess of $15,000 is transferred from the revaluation surplus to retained earnings, so the balance remaining on the revaluation surplus account is 600,000 – 15,000 = $585,000.

    June 30, 2021 at 12:57 pm #626695
    maximus07
    Participant
    • Topics: 446
    • Replies: 437
    • ☆☆☆☆

    Yes sir. But my question is different.
    Why accumulated depreciation (as per old depreciation) is not first subtracted from Revaluation surplus before entering into excess of depreciation calculation?

    June 30, 2021 at 3:52 pm #626705
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    I understood your question perfectly, and the accumulated depreciation is never subtracted from the revaluation surplus.

    The surplus is the difference between the revalued amount and the carrying value of the asset. The carrying value / net book value (which is what is given in this question) is the original cost less the accumulated depreciation.

    June 30, 2021 at 5:04 pm #626710
    maximus07
    Participant
    • Topics: 446
    • Replies: 437
    • ☆☆☆☆

    Sir in this question we subtract Accumulated Depreciation from Revaluation Surplus. Can you make me clear please. I am very confused.

    A company bought a property four years ago on 1 January for $ 170,000. Since then property prices have risen substantially and the property has been revalued at $210,000.
    The property was estimated as having a useful life of 20 years when it was purchased. What is the balance on the revaluation surplus reported in the statement of financial position?
    A $210,000
    B $136,000
    C $74,000
    D $34,000
    Answer is C

    July 1, 2021 at 7:53 am #626770
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    The accumulated depreciation is never subtracted from the revaluation surplus!!

    The accumulated depreciation is subtracted from the cost in order to get the carrying value (net book value).

    Here the cost was $170,000 and the accumulated depreciation at the time of the revaluation was 4 x 170,000/20 = $34,000.

    Therefore the carrying value was 170,000 – 34,000 = $136,000.

    The surplus on revaluation is the difference between the revalued amount and the carrying value, as I wrote before, and is therefore 210,000 – 136,000 = $74,000.

    I do suggest that you watch my free lectures on this.

    July 1, 2021 at 11:43 am #626790
    maximus07
    Participant
    • Topics: 446
    • Replies: 437
    • ☆☆☆☆

    Thank you sir.

  • Author
    Posts
Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • verweijlisa on Financial performance – Example 2 – ACCA Financial Reporting (FR)
  • John Moffat on Linear Programming – Spare capacity and Shadow prices – ACCA Performance Management (PM)
  • John Moffat on The Statement of Financial Position and Income Statement (part d)
  • Salexy on Linear Programming – Spare capacity and Shadow prices – ACCA Performance Management (PM)
  • omerbasheer on The Statement of Financial Position and Income Statement (part d)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in