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

Test your understanding 3 

 

MaxCo owns a fish finger factory. The premises were purchased on 

1 January 20X1 for $450,000 and depreciation charged at 2% pa on a 

straight-line basis. 

MaxCo now wishes to revalue the factory premises to $800,000 on 

1 January 20X7 to reflect its market value. 

What is the balance on the revaluation surplus account after 

accounting for this transaction? 

A $350,000 

B $395,000 

C $404,000 

D $413,000 

 

 

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Chapter 8 

KAPLAN PUBLISHING

 

151 

4 

Depreciation and disposal of a revalued asset 

Depreciation of a revalued asset  

•

 

When a non-current asset has been revalued, the charge for depreciation 

should be based on the revalued amount and the remaining useful life of 

the asset. 

•

 

This charge will be higher than depreciation prior to the revaluation and 

will be charged to profit or loss as normal. 

•

 

IAS 16 says that