Question

July 1^st2018, the GL (i.e. general ledger) balance for Building which was classified as Property, Plant and Equipment was valued at $2,100,000. In addition, Accumulated Depreciation of the Building was $0, and also there was a Revaluation Reserve for Buildings which was $230,000.  The building will depreciate using the straight-line depreciation method for 40 years and assuming that there is no residual value, and it is counting forward from July 1^st2018. June 30th 2019, after annual depreciation, had been posted and also recorded there was an appraisal that gave a fair value estimate of $2,000,000 for the building. Scottway Ltd’s GL also included these other accounts - Gain/Loss Revaluation, Building and OCI Gain/Loss, Revaluation Building.

Record the necessary journal entries to revalue this building on June the 30^th2019.

Answer 1

Scottway Ltod. Journal Entries Accounts Title and Explanation June 30, 2019 |Depreciation Expense 52500 52500 To record the Depreciation expense) June 30, 2019 Revaluation Building OCI Gain/loss 47500 To record the Revaluation effect on Buildingl Note 1: Calculation of Depreciation Expense (2100000-0)/40 52500 Note 2: Calculation of Revaluation Building amount (2100000-2000000)-52500 -47500 Note 3: As per IFRS provision, the difference between the revalued amount of asset and its carrying amount will be charge to revaluation reserve if already created and its gain or loss will be recognised as other comprehensive income