Banter Co purchased an office building on 1 January 20X1. The building cost was $1,600,000 and this was depreciated by the straight line method at 2% per year, assuming a 50-year life and nil residual value. The building was re-valued to $2,250,000
on 1 January 20X6. The useful life was not revised. The company!s financial year ends on 31 December.
What is the balance on the revaluation surplus at 31 December 20X6?
the 5 years to 31 December 20X5, accumulated depreciation on the building is $1,600,000 x 2% x 5 years = $160,000.
On revaluation on 1 January 20X6： Debit Credit $ $Building (2,250,000 - 1,600,000) 650,000
Accumulated depreciation 160,000 Revaluation surplus 810,000The annual depreciation charge from 1 January 20X6 =
$2,250,000/45 years remaining = $50,000.
This is $18,000 more than the annual depreciation charge based on the historical cost of the asset.This excess depreciation
charge is transferred each year from revaluation surplus to retained earnings, and the revaluation surplus at 31 December
20X6 = $810,000 - $18,000 = $792,000.
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Which of the following is a ratio which is used to measure how much a business owes in relation to its size?
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$'000
Inventories 1,900
Receivables 1,000
Bank overdraft 100
Payables 1,000
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