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Hi sir,
Hope you’re well.I had a question about tangible non -current assets from the 2019-2020 BPP practice and revision kit.for question 8.5
At 31 december 2013 Q, a limited liability company,owned a building that had cost $800,000 on January 2014 .it was being depreciated at2% per year.
On 31december 2013 a revaluation to $1,000,000 was recognised.At this date the building had a remainig useful life of 40years.
What is the balance on the revaluation surplus at 31december 2013?In the solution given in the book for revaluation surplus its has been done as follows
Revaluation surplus-(1,000,000-(800,000-(800,000 x 2% x 10)))=360,000
My doubt is why are they multiplying it by a 10?
As i got the answer as 216,000(1,000,000 – (800,000-(800,000×2%)))
Thanks.You have copied the dates wrongly.
It had been bought in January 20W4 and was revalued in December 20X3.
(If the letters cause confusion for you, then W comes before X, so it is the same as though it was bought in 2004 and revalued in 2013).So it had been depreciated for 10 years by the time it was revalued 🙂
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