Revaluation and depreciation

So the entry that you're asking about is ADDING to retained earnings! Think of it as "compensation" for the fact that this year's profits have been reduced by this extra depreciation expense caused by the revaluation. As each year goes by, the profits for those years are being "unfairly" reduced because of that additional depreciation so this (recommended, not required) transfer from revaluation reserve to retained earnings is to get back to a retained earning figure that would have been apparent if we hadn't revalued. Does that make it easier for you?

That was great thanks! ?

You're welcome