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31/12/2004 a company owned a building that it had purchased 10 years ago for $800,000 it
was being depreciated at 2% per year on the straight line basis1/1/2005 a revaluation to 1,000,000 was recognised at this date the building had a remaining useful life of 40 years
what is the depreciation charge for the yeaear ended 31/12/2005 and revaluation surplus balance as at 1/1/2005?help me with this please how can i calculate the deprecation surplus
Have you watched the lectures??
You calculate the carrying value as at 31.12.2004 (cost less 10 years depreciation, which is 640,000). So the transfer to the revaluation reserve at 1.1.2005 is 1,000,000 – 640,000 = 360,000.
The depreciation charge for year ended 31.12.2005 is 1,000,000/40 = 25,000.
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