Question 1

**Section A**

Metro Builders Ltd purchased a piece of heavy machinery on 1 January 20X1 for $100,000. It had an estimated useful life of 10 years and no residual value. The company uses straight-line depreciation. On 31 December 20X3, the machinery was revalued to $85,000.

What is the balance on the revaluation surplus account immediately after this revaluation?

Accepted Answer

Calculate the accumulated depreciation up to the date of revaluation. Subtract this from the original cost to find the carrying amount. The difference between the revalued amount and the carrying amount is the revaluation surplus.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating depreciation for the wrong number of years (e.g., 2 years instead of 3).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 1

More questions from this exam