Pigeon Ltd purchased land for $750 000 6 years ago.It was revalued on 31 December 2009 to $600 000.A subsequent revaluation on 31 December 2011 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 2009 and 31 December 2011?

Question

Quizplus · Accepted Answer

- On 31 December 2009, the revaluation resulted in a decrease in the value of the land, so we need to record a debit to revaluation reserve and a credit to land:
Dr Revaluation reserve $150,000
Cr Land $150,000
- On 31 December 2011, the revaluation resulted in an increase, so we need to record a credit to revaluation reserve and a debit to land:
Dr Land $300,000
Cr Revaluation reserve $300,000

Therefore, the journal entries required to record the revaluations on 31 December 2009 and 31 December 2011 are as follows:

31 Dec 2009:
Dr Revaluation reserve $150,000
Cr Land $150,000

31 Dec 2011:
Dr Land $300,000
Cr Revaluation reserve $300,000

Pigeon Ltd Purchased Land for $750 000 6 Years Ago