Question 1

Metro Utilities owns a headquarters building originally purchased for $2,000,000. Accumulated depreciation to date is $400,000. The company decides to revalue the building to its current market value of $2,500,000. What is the amount to be credited to the revaluation surplus? (Enter the number only, without commas or currency symbols)

Accepted Answer

Calculate the carrying amount (Cost - Accumulated Depreciation) and subtract it from the new revalued amount.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the surplus as Revalued Amount - Original Cost ($2,500,000 - $2,000,000 = $500,000), forgetting to account for accumulated depreciation.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 3

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