Pick Ltd - Question

Jimmyboy1888

Hi, hoping someone can help explain why the land revaluation amount should be 200K in the following question (I have the answer but, don't know how to arrive at it !).

From the trial balance (as at 31/3/08) land and buildings at cost are 440K
Accumulated depreciation (at 1/4/07) 55K

Q. On 31/3/08 the company sold land & buildings, which had cost 100K with accum. depreciation of 15K, for 195K. At the same time, the rest of the land & buildings were revalued at 500K. Neither the sale or the revaluation had been included in the accounting records (TB figures above). Depreciation - 5% straight line basis.

I would have thought the revaluation amount would be 160K but, the answer (below) shows 200K ?

Can anyone explain why ? Any help would be much appreciated.

Cheers

Jim


Note 5 Property; Plant; Equipment; L& B
Cost £'000s
Opening Balance 440
add Revaluations 200
640
less Disposals (100)
540
Depreciation
Opening Balance 55
less Disposals (15)
40
add Depreciation For The Year 27
67

NBV as at 31st March 2007 385
NBV as at 31st March 2008 473

sdv

Jimmyboy1888 wrote: »

I would have thought the revaluation amount would be 160K but, the answer (below) shows 200K ?

It is possible that you may have overseen the accumulated depreciation?

I worked out as follows

The cost of the remaining PPE = 440 – 100 = 340
Accumulated depreciation for remaining PPE= 55 -15 = 40
Therefore Net book value = (340 - 40) = 300
PPE re-valued at 500
Revaluation increase = (500-300) 200

Jimmyboy1888

Superb !
Thanks for that........been driving me crazy.