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Depreciation and Revaluation of Fixed Assets The following details were taken from the books of Shalvey Ltd: 01/01/2017 Buildings at cost amounted to €780,000 - Leaving Cert Accounting - Question 3 - 2019
Question 3
Depreciation and Revaluation of Fixed Assets The following details were taken from the books of Shalvey Ltd: 01/01/2017 Buildings at cost amounted to €780,000. 01... show full transcript
Worked Solution & Example Answer:Depreciation and Revaluation of Fixed Assets The following details were taken from the books of Shalvey Ltd: 01/01/2017 Buildings at cost amounted to €780,000 - Leaving Cert Accounting - Question 3 - 2019
Step 1
The buildings account for the two years 2017 and 2018.
Answer
To prepare the Buildings Account for 2017 and 2018:
- 01/01/2017: Opening balance at cost: €780,000
- 01/06/2017: Add purchase of building: +€140,000
- 01/07/2017: Disposal: -€110,000
- 31/12/2017: Closing balance: €810,000
- 01/01/2018: Add revaluation: +€90,000
- 31/12/2018: Closing balance: €900,000.
Final Buildings Account:
| Date | Details | € |
|---|---|---|
| 01/01/2017 | Balance b/d | 780,000 |
| 01/06/2017 | Bank | 140,000 |
| 01/07/2017 | Disposal | -110,000 |
| 31/12/2017 | Balance c/d | 810,000 |
| 01/01/2018 | Revaluation | 90,000 |
| 31/12/2018 | Balance c/d | 900,000 |
Step 2
The provision for depreciation account for the two years 2017 and 2018.
Answer
To prepare the Provision for Depreciation Account for 2017 and 2018:
- 01/07/2017: Balance brought forward: €662,000
- Disposal on 01/07/2017: -€60,000
- 31/12/2017: Closing balance before depreciation: €36,000
- Depreciation for 2017: -€34,000
- Revaluation on 01/01/2018: +€36,000
- Closing balance on 31/12/2018: €45,000
Final Provision for Depreciation Account:
| Date | Details | € |
|---|---|---|
| 01/07/2017 | Balance b/d | 662,000 |
| 01/07/2017 | Disposal | -60,000 |
| 31/12/2017 | Balance c/d | 36,000 |
| 01/01/2018 | Revaluation | 36,000 |
| 31/12/2018 | Balance c/d | 45,000 |
Step 3
The buildings disposal account for the year ended 31/12/2017.
Answer
To prepare the Buildings Disposal Account for the year ended 31/12/2017:
- 01/07/2017: Buildings Sold: €110,000
- Profit on Disposal: €25,000 (from the sale)
- Provision for Depreciation Adjustment: €60,000
Final Disposal Account:
| Date | Details | € |
|---|---|---|
| 01/07/2017 | Buildings | 110,000 |
| 01/07/2017 | Profit on disposal | 25,000 |
| 01/07/2017 | Bank | -75,000 |
| 01/07/2017 | Provision for dep. | 60,000 |
| 31/12/2017 | Balance c/d | 135,000 |
Step 4
The revaluation reserve account.
Answer
To prepare the Revaluation Reserve Account:
- 01/01/2018: Buildings Amount: €900,000
- Provision for Depreciation on Revalued Amount: €36,000
- Total revaluation adjustment = €126,000.
Final Revaluation Reserve Account:
| Date | Details | € |
|---|---|---|
| 01/01/2018 | Buildings | 900,000 |
| 01/01/2018 | Provision for dep. | 36,000 |
| 01/01/2018 | Balance c/d | 126,000 |