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Hi Mike ,
Question 3 Specimen Paper
“Quincy will make a transfer from the revaluation reserve to retained earnings in respect of the realisation of the revaluation” 16 years remaining life
I correctly calculated depreciation to 18,000 (2 L and 16 B) .
Is annual transfer only based on revaluation of Buildings? Because the correct answer was (1000) RR and 1000 in RE in statement of changes in equity.
Thanks in advance“I correctly calculated depreciation to 18,000 (2L and 16B)”
Do you mean that you correctly calculated REVALUATION?
Ask yourself “What is the estimated remaining useful life of land?”
Now ask “Over what period should I depreciate the land?”
And finally ask “Therefore what should be the annual transfer from revaluation reserve to retained earnings in respect of the depreciation of the land?”
OK?
transfer occurs on excess depreciation so since only buildings depreciate this is why only revaluation on buildings was transferred
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