Page 123 - F3 -FA Integrated Workbook STUDENT 2018-19

Non-current assets: disposal and revaluation

Example 3

Revaluation of non-current assets

Platinum owns a building which it purchased thirty years ago at a cost of
$200,000, depreciating it over fifty years on a straight-line basis, with a nil
estimated residual value. At 31 December 20X5, Platinum decided to account
for the building using the revaluation basis at its fair value of $300,000.

Required:

Show the accounting entries required to account for revaluation of the
building at 31 December 20X5 and present the ledger accounts for the
building asset account and the revaluation surplus account.

Solution

Debit $ Credit $

Building asset 100,000 Revaluation surplus 100,000
Accumulated dep’n 120,000 Revaluation surplus 120,000

Building asset
Date Details $ Date Details $

01.01.X5 Balance b/d 200,000
Revaluation 31.12.X5
31.12.X5 100,000 Balance c/d 300,000
surplus
–––––– ––––––

300,000 300,000
–––––– ––––––

01.01.X6 Balance c/d 300,000

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