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Transfer of excess depreciation to Retained earnings

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Transfer of excess depreciation to Retained earnings

  • This topic has 1 reply, 2 voices, and was last updated 3 months ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 24, 2025 at 5:34 am #716332
    divyanshu
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    Say there’s an asset of 31 Dec,X5 $10000 having useful life of 5 years . On 31 Dec,X7 it was revalued to 12000 with remaining life of 3 years. And Co. has policy of transferring excess dep. to Ret. Earnings.

    For year ended 31 Dec, X8 , the depreciation charged will be $4000 and tranfer to ret. earn. from reval. surplus will be $2000.

    So, the journal entries will be :

    P/L Dr. 4000
    To Dep. 4000

    Reval. Surplus Dr. 2000
    To Ret. Earnings. 2000

    Am I right ?

    March 31, 2025 at 2:30 pm #716426
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    Yes, you will find that your numbers and entries above are correct. You have recorded the new depreciation on the revalued amount over the remaining life of 3 years. You have then transferred the excess depreciation as a reserve transfer in the SOCIE.

    Top work!

    Thanks

  • Author
    Posts
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