2B) A company revalues its buildings and decides to incorporate the revaluation into the financial statements. The following information is relevant. Extract from Balance Sheet as at 31/12/07: Buildings: Cost $1,500,000 Deprecation $450,000 $1,050,000 Depreciation has been provided at 2% per annum on a straight line basis. The building is revalued at 30 June 2008 at $1,380,000. There is no change in its remaining estimated future life. Transfers from revaluation reserves to retained eamings are made for the amount of revaluation surplus realized each period. Required: Show the relevant extract of the financial statement as at Dec 31, 2008.

2B) A company revalues its buildings and decides to incorporate the revaluation into the financial statements. The following information is relevant. Extract from Balance Sheet as at 31/12/07: Buildings: Cost $1,500,000 Deprecation $450,000 $1,050,000 Depreciation has been provided at 2% per annum on a straight line basis. The building is revalued at 30 June 2008 at $1,380,000. There is no change in its remaining estimated future life. Transfers from revaluation reserves to retained eamings are made for the amount of revaluation surplus realized each period. Required: Show the relevant extract of the financial statement as at Dec 31, 2008.

Name: 2B) A company revalues its buildings and decides to incorporate the r
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Description: 2B) A company revalues its buildings and decides to incorporate the revaluation into thefinancial statements. The following information is relevant.Extract from Balance Sheet as at 31/12/07:Buildings:Cost$1,500,000Deprecation $450,000$1,050,000Depre

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

2B) A company revalues its buildings and decides to incorporate the revaluation into the
financial statements. The following information is relevant.
Extract from Balance Sheet as at 31/12/07:
Buildings:
Cost
$1,500,000
Deprecation $450,000
$1,050,000
Depreciation has been provided at 2% per annum on a straight line basis. The building is
revalued at 30 June 2008 at $1,380,000. There is no change in its remaining estimated future life.
Transfers from revaluation reserves to retained eamings are made for the amount of revaluation
surplus realized each period.
Required: Show the relevant extract of the financial statement as at Dec 31, 2008.

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