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Buildings are depreciated at 5% of cost. At 3131 oct 2006 the buildings were professionally valued at $1800,000 and the directors wish this valuation to be incorporated into the accounts.
The Buildings value in the trial balance is 1500,000 and the accumulated depreciation is 360,000.
How would u account this in the P&l statement and the balance sheet ?
revaluation reserves surplus amount?The carrying value is 1,500,000 – 360,000 = 1,140,000.
They are revalued at 1,800,000, and so the revaluation surplus (to appear in the SOFP) is 1,800,000 – 1,140,000 = 660,000.
You have not given the accounting year end so depending on the dates it may mean that more depreciation is charged up to the date of revaluation in which case it would obviously change the above figures.
(The terms P&L and Balance Sheet stopped being used some years ago – it is Statement of profit or loss, and Statement of financial position)
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