I don't quite understand te concept of the revaluation of property and what to do with the revaluation in case of disposal.
The question is as follows.
Current book value van the property: 300.000
Revaluation to 320.000
Entry:
Debit: Buildings: 20.000
CreditL To revaluation reserve: 20.000
Building sold for 310.000
Debit: Accounts receivable: 310.000
Credit: To buildings: 310.000
Debit: Revaluation reserve: 10.000
Credit: To Buildings: 10.000
Debit: Revaluation reserve: 10.000
Credit: To Retained earnings: 10.000 ???
My questions are as follows:
1. Regarding the last entry, should the credit entry be: realized holding gain (income) instead of retained earnings?
2. If 1 = yes, then, i presume net income is 10.000 higher and you have to pay taxes?
3. If the building wasn't sold, the revaluation would still be 20.000, thus Other comprehensive income would be 20.000 to right?
Kind regards i appreciate it
The question is as follows.
Current book value van the property: 300.000
Revaluation to 320.000
Entry:
Debit: Buildings: 20.000
CreditL To revaluation reserve: 20.000
Building sold for 310.000
Debit: Accounts receivable: 310.000
Credit: To buildings: 310.000
Debit: Revaluation reserve: 10.000
Credit: To Buildings: 10.000
Debit: Revaluation reserve: 10.000
Credit: To Retained earnings: 10.000 ???
My questions are as follows:
1. Regarding the last entry, should the credit entry be: realized holding gain (income) instead of retained earnings?
2. If 1 = yes, then, i presume net income is 10.000 higher and you have to pay taxes?
3. If the building wasn't sold, the revaluation would still be 20.000, thus Other comprehensive income would be 20.000 to right?
Kind regards i appreciate it