ExpertACCA · Question 24 · Financial Reporting
Section B - Case 2: TidalWave Energy
TidalWave Energy also owns a fleet of maintenance vessels. On 1 January 20X5, the fleet was revalued upwards by $1,200,000, creating a revaluation surplus. On 31 December 20X6, due to a market downturn, the fleet suffered a revaluation decrease of $1,500,000. No excess depreciation transfers have been made.
How should the $1,500,000 revaluation decrease be recorded in the financial statements for the year ended 31 December 20X6?
Section B - Case 2: TidalWave Energy
TidalWave Energy also owns a fleet of maintenance vessels. On 1 January 20X5, the fleet was revalued upwards by $1,200,000, creating a revaluation surplus. On 31 December 20X6, due to a market downturn, the fleet suffered a revaluation decrease of $1,500,000. No excess depreciation transfers have been made.
How should the $1,500,000 revaluation decrease be recorded in the financial statements for the year ended 31 December 20X6?
Answer options:
Debit Profit or Loss $1,500,000
Debit Revaluation Surplus $1,500,000
Debit Revaluation Surplus $1,200,000; Debit Profit or Loss $300,000
Debit Profit or Loss $1,200,000; Debit Revaluation Surplus $300,000
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