ACCA FA · Chapter 6 · Question 7 of 12
A building with a cost of $400,000 and accumulated depreciation of $80,000 is revalued to $500,000. What amount should be credited to the revaluation surplus?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $180,000
Explanation
The revaluation surplus is the revalued amount less the carrying amount: $500,000 - ($400,000 - $80,000) = $180,000. The accumulated depreciation is eliminated as part of the revaluation. Comparing the valuation with original cost gives only $100,000, which ignores the depreciation already charged.
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