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Mr mike
Revaluation building 16000 and land by 2000 and life remaining building 16 years what transfer to retained from revaluation this year
Thanks
Yes, it’s $16,000 / 16 years
The annual transfer is to alleviate the burden on retained earnings of the additional depreciation on the revaluation surplus. Remember, depreciation will be being charged on the revalued amount and that will cause “surplus” depreciation to be charged against the profits for the year. The annual transfer from revaluation reserve to retained earnings has the effect of restoring the level of retained earnings to a figure they would have been had the revaluation not taken place.
Land? It’s not depreciated so there is no affect on the year’s profits simply as a result of the land being revalued
OK?
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