Page 124 - F3 -FA Integrated Workbook STUDENT 2018-19

Chapter 8

Example 3 cont.

Revaluation surplus

Date Details $ Date Details $
31.12.X5 Balance c/d 220,000 31.12.X5 Building asset 100,000

31.12.X5 Acc dep’n 120,000
–––––– ––––––

220,000 220,000
–––––– ––––––
01.01.X6 Balance b/d 220,000

2.2 Equity transfer

 When a non-current asset has been revalued, the charge for depreciation
should be recalculated based upon the revalued amount and the remaining
useful life of the asset.

 The charge will be higher than depreciation prior to the revaluation and will be
charged to profit or loss as normal.

 The entity can choose whether or not to make an annual transfer within equity
of the excess of the new annual depreciation charge over the old depreciation
as follows:

Debit Revaluation surplus

Credit Retained earnings

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