Pigeon Ltd purchased land for $750,000 6 years ago. It was revalued on 31 December 2002 to $600,000. A subsequent revaluation on 31 December 2004 found the market value to be $900,000 due to a change in council zoning for the area. What are the journal entries required to record the revaluations on 31 December 2002 and 31 December 2004?
E) None of the given answers.

Question

Quizplus · Accepted Answer

31 December 2002:
Revaluation surplus (OCI)  = [$600,000 - $750,000] = $150,000
Land revaluation reserve = $150,000

31 December 2004:
Revaluation surplus (OCI) = [$900,000 - $600,000] = $300,000
Land revaluation reserve = $150,000 (balance b/f) + $300,000 (revaluation surplus) = $450,000

Therefore, the journal entries required are:

31 December 2002:
Revaluation surplus (OCI) 	$150,000
Land revaluation reserve 	$150,000

31 December 2004:
Revaluation surplus (OCI) 	$300,000
Land revaluation reserve 	$150,000
 						$450,000

Pigeon Ltd Purchased Land for $750,000 6 Years Ago