Page 380 - F3 -FA Integrated Workbook STUDENT 2018-19

Chapter 24

Example 4

Recalculation of the depreciation charge

Continuing with Example 3, Platinum now needs to calculate the revised
depreciation charge relating to the building for 20X6 onwards:

Required:

Calculate the revised annual depreciation charge for the building.

$
$300,000/20 years 15,000

Platinum has also decided to make the annual transfer of ‘excess
depreciation’ as permitted by IAS 16.

Required:

Calculate the amount of the annual transfer and state the accounting
entries required.

$
New annual depreciation charge 15,000

Previous annual depreciation charge 4,000

–––––
Annual excess depreciation transfer 11,000
–––––

Accounting entries

Debit $ Credit $

Revaluation surplus 11,000 Retained earnings 11,000

Note that the transfer of excess depreciation is made within the statement of
changes in equity.

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