Leaving Cert Accounting Revaluation of Fixed Assets: Revaluation of Fixed Assets

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Revaluation of Fixed Assets

On 1 January 2004 Lyons Ltd owned freehold buildings which cost €290,000 and adjacent land which cost €210,000. The company depreciates its buildings at the rate of 2% per annum straight line method. It is the company's policy to apply a full year's depreciation in the year of acquisition and no depreciation in the year of disposal. This property had been purchased on 1/1/2000 and depreciation had been charged against profits in each of these four years (land is not depreciated).

The following details were taken from the firm’s books:

Jan 1 2004  Re-valued land at buildings at €600,000. Of this revalued amount €240,000 was attributable to land.
Jan 1 2005  Sold for €280,000 and which cost €210,000 but was since re-valued on 1/1/2004.
Jan 1 2006  Purchased buildings for €400,000. During the year 2006, €150,000 was paid to a building contractor for extension to these recently purchased buildings. The company's own employees also worked on the extension and they were paid wages amounting to €50,000 by Lyons Ltd for this work.
Jan 1 2007  Re-valued buildings owned at €1,056,000 at 10% increase in respect of each building.
Jan 1 2008  Sold for €420,000 the buildings owned on 1/1/2004. The remaining buildings were re-valued at €750,000.

You are required to:

(a) Prepare the relevant ledger accounts in respect of the above transactions for the years ended 31 December 2004 to 31 December 2008.

(Bank Account and Profit and Loss Account not required)

(b) Show the relevant extract from the Balance Sheet as at 31/12/2008.

Date	Details	Debit (€)	Credit (€)	Balance (€)
01/01/2004	Balance b/d	500,000		500,000
01/01/2004	Revaluation Reserve	600,000		1,100,000
01/01/2005	Disposal (sold for €280,000)		240,000	860,000
31/12/2005	Balance c/d			860,000
01/01/2006	Balance b/d	860,000		860,000
01/01/2006	Bank (purchase of new buildings)	400,000		1,260,000
01/01/2007	Revaluation Reserve	1,056,000		2,316,000
01/01/2007	Balance to 31/12/2007			2,316,000
01/01/2008	Balance b/d	2,316,000		2,316,000
01/01/2008	Disposal (sold for €420,000)		396,000	1,920,000
31/12/2008	Balance c/d			1,920,000

Assets	€
Fixed Assets:
- Land and Buildings	750,000
- Revaluation Reserve	175,200

Total Assets	925,200

Capital and Reserves:
- Revenue Reserve	180,800
- Profit & Loss Account	(as per accounts)

Total Capital & Reserves	925,200

Revaluation of Fixed Assets On 1 January 2004 Lyons Ltd owned freehold buildings which cost €290,000 and adjacent land which cost €210,000 - Leaving Cert Accounting - Question 3 - 2009

Worked Solution & Example Answer:Revaluation of Fixed Assets On 1 January 2004 Lyons Ltd owned freehold buildings which cost €290,000 and adjacent land which cost €210,000 - Leaving Cert Accounting - Question 3 - 2009

Prepare the relevant ledger accounts in respect of the above transactions for the years ended 31 December 2004 to 31 December 2008.

Show the relevant extract from the Balance Sheet as at 31/12/2008.

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