Acca financial Accounting (FA) Study Text ac ca (FA)

Statement of financial position: 

Dr Non-current asset – land $100,000 

Cr Revaluation surplus (within equity) $100,000 

 

 

Illustration 2 – Revaluation of non-current assets 

 

Hamstrung runs a kilt-making business in Scotland. It has run the 

business for many years from a building which originally cost $300,000 

and on which $100,000 accumulated depreciation has been charged to 

date. Hamstrung wishes to revalue the building to $750,000. 

How is this reflected in the financial statements? 

 

 

Solution to Illustration 2 

 

The current balances in the accounts are: 

Building cost $300,000 

Accumulated depreciation $100,000 

•

 

The building asset account needs to be raised by $450,000 to 

$750,000. 

•

 

On revaluation, the accumulated depreciation account is cleared 

out. 

Therefore the double entry required is: 

Dr Non-current asset – building $450,000 

Dr Accumulated depreciation $100,000 

Cr Revaluation surplus $550,000 

 

 

 

 

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