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At april 1 2009 carried office block in f/s at original cost of $ 2 million less depreciation of $400,000 (based on its original life of 50 years). Revalued office block on 1oct 2009 to its current value of $ 2.2 million. Useful life remaining was asssesssed at time of vzpaluation and considered to be 40 years at this time.company policy is to depreciate proportionally. How the office nlock be accounted for in YE 31/3/2010.
Sir for the above question, i have a doubt on the calculation of CARRYING VALUE OF NCA AT REVALUATION DATE……the techincal article mentioned that…the depreciation is calculated as $400 000 – (2000000/50)×6/12 = 1580000….this is weird….why do we hv to mjnus $20000 from $400000???????
I think that you have misinterpreted the treatment of the 20,000!
Are you happy with the 20,000 depreciation for a half year’s depreciation?
(2,000,000 / 50 = 40,000 per annum depreciation)
Carrying value brought forward from last year was 2,000,000 less 10 years’ depreciation (400,000) = 1,600,000
Revaluation was on 1 October so we need another half year’s depreciation ie another 20,000 and that brings the pre-revaluation value down to 1,580,000
This is then revalued to 2,200,000 on 1 October and depreciated for 40 years from that date at the rate of 55,000 for a full year
Is that clearer for you?
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