Revaluation Reserve - DFS - Help!

HayleyM

Hi,

I am a bit stuck on this! I have a question that we have been given for homework and the it has the following:

"The land has been revalued by professional valuers at £3,200,000. The revaluation is to be included in the financial statements."

The land has a balance on £2,800,000 in the trial balance. So there is a difference of £400,000.

What do I do with 400k? Do I do a journal and then post it into the financial statements? If so, I CR the revaluation reserve in the equity section but what do I debit?
Or do I just put it in the discontinued operations section of the income statement?

I hope all of this makes sense!! I am not very good at explaining myself!
Thanks in advance

AK002

I may be wrong (i've not done DFS yet) but do you not just increase the cost (dr) and cr the revaluation reserves? And it gets shown in the notes to the accounts.. and the struggle..

Someone who's done DFS will confirm tho

reddwarf

quote from Osborne 'The increase of the land(and buildings) is generally credited directly within equity to a revaluation surplus. The debit is shown under non current assets are £400K increase in valuation on the statement of FP.

NB although a decrease which reverses part or all of a previous increase to the same asset is debited to the revaluation surplus.'

hope that helps a wee bit..

HayleyM

Yes that has helped a lot!!
Thanks for both of you!