UK Depreciating Land and Buildings

[longlivehongkong]

Hi, I am a student self-studying A Level Accounting and I don't have a teacher to ask so I'm turning to this amazing forum.

The question I am attempting asked me to prepare a statement to calculate the adjusted profit for the year ended 30 June 2017 (details in the first picture). I just do not know how to calculate the increase in the depreciation for land and buildings, because I thought if the buildings were revalued, they would not need to be depreciated. Could anyone please help me deduce how the mark scheme deduced an increase in the depreciation for land and buildings as shown in the second picture?

 

[Fidget]

Even with revaluations, depreciation still applies.

Maybe I'm missing something here, but I'm not following how the additional depreciation has been calculated in the answer. The new charge for the year is ($2,700,000/3*4%) = $36,000. The original amount of ($2,400,000/3*4%) = $32,000 has already been charged and so the additional depreciation would be $36,000-$32,000 = $4,000. So I don't know where $13,000 comes from.

I can't see where the 20 & 25 that is being used in the working comes from either. If, along with the revaluation, the useful life had reduced from 25 years to 20 years, then $13,000 would be correct. But that piece of information is not there, so I don't know how it's been arrived at.

 

[TaxDevil]

I am assuming in UK they let you depreciate land?

 

[Fidget]

I am assuming in UK they let you depreciate land?

Generally land is treated has having an indefinite useful life and isn't depreciated under UK GAAP (or IFRS).

 

[TaxDevil]

Same as US, that is what I thought but in depreciation I saw land and building.

 

[Fidget]

It's only because they're grouped together, and the question tells you how much of the cost is attributed to land and to buildings. You can see from the depreciation rates given too that none is charged on land.