Question 1

Section A

Titanium Smelting Co purchased a factory on 1 January 20X1 for $2,000,000. It had an estimated useful life of 40 years and zero residual value. On 31 December 20X5, the factory was revalued to $2,400,000.

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

Accepted Answer

Calculate the carrying amount at the date of revaluation (Cost - Accumulated Depreciation). Subtract the carrying amount from the revalued amount to find the surplus.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Comparing the revalued amount to the original cost instead of the carrying amount.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 5

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