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Hi,
I suspect I’m missing something really obvious here so please bear with me.
I’m working through a question where a building has been revalued downwards having previously been revalued up.
The accounting treatment in the answer is:
Dr Reval surplus 20k
Dr Accumulated DepN 15k
Cr Buildings cost 35kThe effect on the reval surplus account is:
Cost 35k Balance B/D 105k
Balance C/S 85k Accumulated DepN 15KWhere is the 20k debit to the reval surplus account as shown in the first part of the answer?
Thanks,
It is the net of the 35k and 15k. In fact it is silly for the answer to show it the way they have. They should have simply had the credit balance brought down of 105k, a debit of 20k as per the journal entry you wrote, and therefore a balance carried forward of 85k.
However I am puzzled that you have the question at all since downwards revaluations are not asked in Paper FA.
Hi John,
Thanks for you answer, that’s cleared it up for me.
The question is from a worked example in the Sept19-Aug20 BPP study text. Page 153 if you have access to a copy.
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