Page 129 - Microsoft Word - 00 BA3 IW Prelims STUDENT.docx

Non-current assets: Disposal, revaluation and impairment

Example 1

A building with an original cost of $100,000 and a current carrying amount of
$70,000, was revalued to $120,000 on 31 December 20X2. At that date, the
remaining useful life of the building was considered to be 12 years and the
building was depreciated using the straight-line basis.

Required:

Prepare the ledger account entries required to account for the
revaluation of the building and calculate the depreciation charge based
upon the revalued amount.

Example 1: Solution

Step 1: Revalue the asset from cost to revalued amount:

Debit

Credit
Step 2: Remove existing accumulated depreciation to the revaluation
date:

Debit

Credit

Illustrations and further practice

123