CIMAPRA19-F01-1 Exam - Topic 3 Question 60 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam

Question #: 60
Topic #: 3

A building was purchased on 1 January 20X1 for $300,000 and had a useful economic life of 40 years. On 1 January 20X5 the building was revalued by a professional surveyor at $450,000. Directors decided to incorporate the revalued amount into the financial statements.

The accounting entries to record the initial revaluation of the building in the financial statements for the year ended 31 December 20X5 will be to debit building cost $150,000 and then:

Acredit accumulated depreciation $37,500 and credit revaluation reserve $112,500.

Bcredit accumulated depreciation $30,000 and credit revaluation reserve $120,000.

Cdebit accumulated depreciation $30,000 and credit revaluation reserve $180,000.

Ddebit accumulated depreciation $37,500 and credit revaluation reserve $187,500.

Show Suggested Answer

Suggested Answer: C

by Serina at Oct 22, 2022, 05:46 PM

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Alpha

4 months ago

Definitely going with option A, it adds up perfectly!

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Margart

4 months ago

Accumulated depreciation should be $37,500 for sure.

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Maryanne

4 months ago

Wait, how do they get $150k from that? Seems off.

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Van

4 months ago

I think option A makes the most sense here.

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Louann

4 months ago

The building was bought for $300k and revalued at $450k.

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Eric

5 months ago

I recall that the total increase in value should be split between accumulated depreciation and the revaluation reserve, but I can't remember the exact figures for this scenario.

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Jovita

5 months ago

I’m a bit confused about the revaluation reserve part. I thought it was supposed to be the difference between the revalued amount and the carrying amount after depreciation.

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Steffanie

5 months ago

I think the accumulated depreciation should be based on the straight-line method over the years. I practiced a similar question, and I feel like $37,500 sounds right.

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Sonia

5 months ago

I remember that we need to adjust the accumulated depreciation when revaluing an asset, but I'm not sure about the exact amounts.

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Karl

5 months ago

Hmm, this seems like a tricky one. I'm not entirely sure about the nuances of how the system handles overlapping scenarios. I'll need to think through the options carefully to determine the correct answer.

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Latrice

5 months ago

Routers sending frequent updates to the whole network sounds like a distance vector protocol, not link state. I'll eliminate option B.

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Ranee

5 months ago

Hmm, I'm a bit confused on this one. I know lifecycle management is about automatically transitioning objects between different storage classes, but I'm not sure which specific object types can be used. I'll have to think this through carefully.

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Hyun

5 months ago

I think option A sounds familiar, but I'm not entirely sure if it's the correct procedure or not.

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