I've got another question regarding my level 3 manual bookkeeping course. I'm not sure how I'm supposed to process a revaluation of an asset. Bellow I've outline a question I was given.
On the trial balance I have
Property Dr £250,000
Property Depreciation Cr £55,000
At the end of the year the property has been revalued at £300,000.
Can anyone tell me how I should put this through the books?
Thanks
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You would debit the Property asset account with the amount of the increase in its value and credit the asset revaluation account with the same amount. Then you would debit the asset revaluation account and credit the Capital accounts of the Partners in the profit sharing ratio.
Alternatively you could forgo the asset revaluation account and just credit the Capital accounts.
You havent said if is a limited company or sole trader/partnership.
Double entry for limited company is
Dr Property Cost £50k Dr Property Depn £55k Cr Revaluation Reserve £105k
As Stardoe says if sole trader trader/partnership you would Dr the Revaluation Reserve £105k and credit the capital account by £105k (in the % profit split if a partnership)
In the example I was thinking of a Ltd company, but it is good to have it explained for sole traders/partners too.
Just one more question in the case of a Ltd company is the Revaluation Reserve a Capital Reserve?
Thanks
__________________
You've got a lot of choices in your life. If getting out of bed in the morning is a chore and you're not smiling on a regular basis, try another choice.
