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

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:
C) debit accumulated depreciation $30,000 and credit revaluation reserve $180,000.
A) credit accumulated depreciation $37,500 and credit revaluation reserve $112,500.
B) credit accumulated depreciation $30,000 and credit revaluation reserve $120,000.
D) debit accumulated depreciation $37,500 and credit revaluation reserve $187,500.

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

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 60
Topic #: 3
[All CIMAPRA19-F01-1 Questions]

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:

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Suggested Answer: C

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

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Alpha
10 months ago
Definitely going with option A, it adds up perfectly!
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Margart
10 months ago
Accumulated depreciation should be $37,500 for sure.
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Maryanne
10 months ago
Wait, how do they get $150k from that? Seems off.
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Van
11 months ago
I think option A makes the most sense here.
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Louann
11 months ago
The building was bought for $300k and revalued at $450k.
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Eric
11 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
11 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
11 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
11 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
11 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
11 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
11 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
11 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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