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James purchased a building for 50,000 ten years ago. Useful life of the asset was 50 years. At the start of the year 11 it was decided to revalue the building to its current market value of 400,000. James completes an annual transfer of excess depreciation between revaulation reserve and retained earnings as allowed bu accounting standards.
What is the amount of reserve transfer?
Sir i have watched your videos..what is the concept used here? Sir like the formula? I know how to solve bt im still confused..The transfer is the difference between the depreciation calculated on the revalued amount and the depreciation that there would have been if there had not been a revaluation.
so it will be like.. 50,000-0 divide it by 50 = 1000 Depreciation.. then 400,000 divide it by 40? sir it is the start of year 11 so why are we not taking 11? instead of 10.
so excess dep = new – old dep (10000-1000)= 9000? is this the correct way?
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