Leaving Cert Accounting Fixed Assets Valuation: Revaluation of Fixed Assets

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Question

Revaluation of Fixed Assets

On 1 January 2004 Lyons Ltd owned freehold buildings which cost €290,000 and adjacent land which cost €210,000. The company depreciates its buildings at the rate of 2% per annum straight line method. It is the company’s policy to apply a full year’s depreciation in the year of acquisition and no depreciation in regard to disposal. This property had been purchased in 2001 and depreciation had been charged against profits in each of these four years (and is not depreciated).

The following details were taken from the firm’s books:

1 Jan 2004  Re-valued land and buildings at €600,000. Of this revalued amount €240,000 was attributable to land.
1 Jan 2005  Sold for €280,000 land which cost €210,000 but was since re-valued on 1/1/2004.
1 Jan 2006  Re-valued buildings for €640,000. During the year 2006, €150,000 was paid to the company’s own employees also in regard to the extension to these recently purchased buildings.
1 Jan 2007  Re-valued buildings owned at €1,056,000 (a 10% increase in respect of each building). The re-valued cost of the buildings owned on 1/1/2004. The remaining buildings were re-valued at €750,000.

You are required to:

(a) Prepare the relevant ledger accounts in respect of the above transactions for each of the years ended 31 December 2004 to 31 December 2008.
(Bank Account and Profit and Loss Account not required)

(b) Show the relevant extract from the Balance Sheet as at 31/12/2008.

Description	€
Land and Buildings	735,000
Less: Provision for Depreciation	(36,000)
Net Book Value	699,000

Description	€
Revaluation Reserve	356,000
Revenue Reserve	180,800
Total Reserves	536,800

Revaluation of Fixed Assets On 1 January 2004 Lyons Ltd owned freehold buildings which cost €290,000 and adjacent land which cost €210,000 - Leaving Cert Accounting - Question 3 - 2009

Worked Solution & Example Answer:Revaluation of Fixed Assets On 1 January 2004 Lyons Ltd owned freehold buildings which cost €290,000 and adjacent land which cost €210,000 - Leaving Cert Accounting - Question 3 - 2009

Show the relevant extract from the Balance Sheet as at 31/12/2008.

Balance Sheet Extract as at 31/12/2008

Fixed Assets

Reserves

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