TVD Lands Ltd acquired a retail complex on 1 January 2013 at a cost of $90,000,000. The building was depreciated using the straight-line basis over the remaining lease period of 40 years starting on 1 January 2013. There is no residual value estimated. On 1 January 2019, the building was revalued to $78,000,000 by an independent valuer. The remaining lease period was not affected by the revaluation. Required: (a) Calculate the accumulated depreciation balance as at 1 January 2019. (b) Prepare journal entries to record the revaluation on 1 January 2019 (c) Prepare all necessary journal entries to account for the depreciation of the revalued building for the year ended 31 December 2019.
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.
TVD Lands Ltd acquired a retail complex on 1 January 2013 at a cost of $90,000,000. The
building was
years starting on 1 January 2013. There is no residual value estimated.
On 1 January 2019, the building was revalued to $78,000,000 by an independent valuer. The
remaining lease period was not affected by the revaluation.
Required:
(a) Calculate the
(b) Prepare
(c) Prepare all necessary journal entries to account for the depreciation of the revalued
building for the year ended 31 December 2019.
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