8. Disposal/revaluation

Question 1

What are DE for disposal for cash ?

Answer 1

1. Remove original cost
   Dr disposal
   Cr asset
2. Remove accumulated Depr.
   Dr acc depr
   Cr disposal
3. Record cash/proceeds
   Dr bank
   Cr disposal

Question 2

What are DE for disposal through part exchange ?

Answer 2

Steps 1-3 same as disposal for cash

4. Record part exchange allowance
   Dr asset (new)
   Cr disposal
5. Record cash paid for new asset
   Dr asset
   Cr bank

Question 3

Where revaluation is shown in financial statements ?

Answer 3

In other comprehensive income because gain is not realised

Question 4

What are DE for revaluation?

Answer 4

Dr asset
Dr accum depreciation ( is cleared)
Cr revaluation surplus

Question 5

How is depreciation carried after revaluation?

Answer 5

Based on revalued amount and remaining useful life

Question 6

What can be done with excess of new annual depreciation?

Answer 6

Can be transferred to retained earnings (must be consistent)
Dr rev surplus
Cr retained earnings

Question 7

After disposing revalued asset what should be done with revaluation surplus ?

Answer 7

Transfer to retained earnings

Dr rev surplus
Cr retained earnings

Question 8

What are disclosures required in fin statements ?

Answer 8

BS - aggregate value of NCA

P/L - depr charge

Notes - NCAs value, method of depr and rates, details of revaluation (date, who performed, methods to estimate value,rev surplus, carrying amount)