How to prepare revaluation account?
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On upward revaluation of a fixed asset which has been previously subject to downward revaluation, an amount of the upward revaluation equal to the amount previously expensed is credited back to the Profit & Loss Account.
- Machinery ‘A’ is purchased on 01-04-1999 for $100,000. It is depreciated using the Straight Line Method at the rate of 10% p.a.
|PARTICULARS||First Revaluation||Second Revaluation|
|Nature of Revaluation||downward||upward|
|Date of Revaluation||01-04-2001||01-04-2004|
|Net Book Value||80,000||46,875|
|Revalued - Appraisal Method||75,000||55,000|
|Increase / (Decrease) in Net Book Value||(5,000)||8,125|
|Debit to Profit & Loss a/c||5,000||0|
|Credit to Profit & Loss a/c||0||5,000|
|Credit to Revaluation Reserve||0||3,125|