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Depreciation and Revaluation of Fixed Assets The following details were taken from the books of Ryan Ltd: 01/01/2009 Buildings at cost amounted to €680,000 - Leaving Cert Accounting - Question 3 - 2011
Question 3
Depreciation and Revaluation of Fixed Assets The following details were taken from the books of Ryan Ltd: 01/01/2009 Buildings at cost amounted to €680,000. 01/01... show full transcript
Worked Solution & Example Answer:Depreciation and Revaluation of Fixed Assets The following details were taken from the books of Ryan Ltd: 01/01/2009 Buildings at cost amounted to €680,000 - Leaving Cert Accounting - Question 3 - 2011
Step 1
The Buildings Account for the two years 2009 and 2010
Answer
To construct the Buildings Account, we start with the opening balance and account for all transactions throughout the years:
- 01/01/2009 Balance b/d: €680,000
- 01/06/2009 Purchase: €230,000
- 01/07/2009 Disposal: €240,000
- 31/12/2009 Balance c/d: €670,000
- 01/01/2010 Balance b/d: €670,000
- 01/01/2010 Revaluation: €230,000
- 31/12/2010 Balance c/d: €900,000
Overall, the Buildings Account can be summarized as follows:
| Date | Details | Dr (€) | Cr (€) |
|---|---|---|---|
| 01/01/2009 | Balance b/d | 680,000 | |
| 01/06/2009 | Purchase | 230,000 | |
| 01/07/2009 | Disposal | 240,000 | |
| 31/12/2009 | Balance c/d | 670,000 | |
| 01/01/2010 | Balance b/d | 670,000 | |
| 01/01/2010 | Revaluation | 230,000 | |
| 31/12/2010 | Balance c/d | 900,000 |
Step 2
The Provision for Depreciation Account for the two years 2009 and 2010
Answer
The Provision for Depreciation Account is calculated based on the depreciation charged against the assets. The entries are as follows:
- 01/01/2009 Balance b/d: €92,000
- 01/07/2009 Disposal: €70,000
- 31/12/2009 Depreciation: €47,000
- 01/01/2010 Revaluation charge: €69,000
- 31/12/2010 Balance c/d: €96,000
The summarized account appears as:
| Date | Details | Dr (€) | Cr (€) |
|---|---|---|---|
| 01/01/2009 | Balance b/d | 92,000 | |
| 01/07/2009 | Disposal | 70,000 | |
| 31/12/2009 | P&L/Depreciation | 47,000 | |
| 01/01/2010 | Balance b/d | 69,000 | |
| 31/12/2010 | Balance c/d | 96,000 |
Step 3
The Buildings Disposal Account for the year ended 31/12/2009
Answer
To set up the Buildings Disposal Account, we record the value at which the asset was disposed as well as any associated costs:
- 01/07/2009 Disposal: €240,000
- 01/07/2009 Proceeds: €250,000
This leads to the following summary:
| Date | Details | Dr (€) | Cr (€) |
|---|---|---|---|
| 01/07/2009 | Buildings | 240,000 | |
| 01/07/2009 | Profit/Loss | 250,000 |
Step 4
The Revaluation Reserve Account
Answer
The Revaluation Reserve Account reflects changes in asset value due to the revaluation:
- 01/01/2010 Revaluation of buildings: €230,000
- Provision for Depreciation: €69,000
The summarized account looks like this:
| Date | Details | Dr (€) | Cr (€) |
|---|---|---|---|
| 01/01/2010 | Buildings | 230,000 | |
| 01/01/2010 | Provision for Depreciation | 69,000 |