Troubadour Limited had an existing revaluation surplus in respect to an item of plant that had been derecognised. An appropriate journal entry to transfer the surplus to retained earnings would include:

Question

Quizplus · Accepted Answer

The correct accounting treatment for the revaluation surplus is to transfer it to retained earnings account. Therefore, the journal entry should include a debit to retained earnings account and a credit to the revaluation surplus account. Option C and D are the only ones that include these accounts, but option D is the correct choice since it credits retained earnings and debits asset revaluation surplus. Option A is incorrect because the gain on revaluation account should not be used to transfer the revaluation surplus to retained earnings.

Troubadour Limited Had an Existing Revaluation Surplus in Respect to an Item