A company which uses the revaluation model for its PPE bought a building on 1 January 2014 for £100m. The building has an estimated useful life of 50 years and nil residual value. On 31 December 2018, the building was revalued at £81m and on 31 December 2020 it was revalued for a second time at £78m. The company uses the straight-line method of depreciation for all PPE items. There was no change to the remaining useful life after each revaluation. What is the net effect of both revaluations on the statement of comprehensive income? Select one: a. A revaluation loss in the income statement of £10m b. A revaluation loss in the income statement of £14m Oc. A revaluation loss in the income statement of £22m d. A revaluation loss in the income statement of £12m e. A revaluation loss in the income statement of £4.2m f. A revaluation loss in the income statement of £8.4m

A company which uses the revaluation model for its PPE bought a building on 1 January 2014 for £100m. The building has an estimated useful life of 50 years and nil residual value. On 31 December 2018, the building was revalued at £81m and on 31 December 2020 it was revalued for a second time at £78m. The company uses the straight-line method of depreciation for all PPE items. There was no change to the remaining useful life after each revaluation. What is the net effect of both revaluations on the statement of comprehensive income? Select one: a. A revaluation loss in the income statement of £10m b. A revaluation loss in the income statement of £14m Oc. A revaluation loss in the income statement of £22m d. A revaluation loss in the income statement of £12m e. A revaluation loss in the income statement of £4.2m f. A revaluation loss in the income statement of £8.4m

Name: A company which uses the revaluation model for its PPE bought a build
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Description: A company which uses the revaluation model for its PPE bought a building on 1 January 2014 for £100m.The building has an estimated useful life of 50 years and nil residual value. On 31 December 2018, thebuilding was revalued at £81m and on 31 Decemb

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

A company which uses the revaluation model for its PPE bought a building on 1 January 2014 for £100m.
The building has an estimated useful life of 50 years and nil residual value. On 31 December 2018, the
building was revalued at £81m and on 31 December 2020 it was revalued for a second time at £78m. The
company uses the straight-line method of depreciation for all PPE items. There was no change to the
remaining useful life after each revaluation.
What is the net effect of both revaluations on the statement of comprehensive income?
Select one:
a. A revaluation loss in the income statement of £10m
b. A revaluation loss in the income statement of £14m
Oc. A revaluation loss in the income statement of £22m
d. A revaluation loss in the income statement of £12m
e. A revaluation loss in the income statement of £4.2m
f. A revaluation loss in the income statement of £8.4m

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