A company bought a property four years ago on 1 January for $ 170,000. Since then property prices
have risen substantially and the property has been revalued at $210,000.
The property was estimated as having a useful life of 20 years when it was purchased. What is the
balance on the revaluation surplus reported in the statement of financial position?
A $210,000
B $136,000
C $74,000
D $34,000

To determine the balance on the revaluation surplus, we'll follow these steps:

1. **Calculate the accumulated depreciation** up to the date of revaluation.
2. **Determine the carrying amount** of the property before revaluation.
3. **Calculate the revaluation surplus**.

### Step 1: Calculate the accumulated depreciation

The useful life of the property is 20 years, and 4 years have passed since it was purchased.

- Annual depreciation = $\frac{\text{Cost of Property}}{\text{Useful Life}} = \frac{170,000}{20} = 8,500$

- Accumulated depreciation over 4 years = $8,500 \times 4 = 34,000$

### Step 2: Determine the carrying amount before revaluation

- Carrying amount before revaluation = Cost of Property - Accumulated Depreciation
- Carrying amount = $170,000 - 34,000 = 136,000$

### Step 3: Calculate the revaluation surplus

- Revalued amount = $210,000
- Carrying amount before revaluation = $136,000

- Revaluation surplus = $210,000 - 136,000 = 74,000$

Thus, the correct answer is:

**C) $74,000**

Would you like further details or have any questions?

Here are some additional questions related to this topic:
1. How would the depreciation expense change after the revaluation?
2. What is the impact of revaluation on the company's financial statements?
3. How is the revaluation surplus recorded in accounting books?
4. What happens to the revaluation surplus if the asset's value decreases in the future?
5. How often should companies revalue their assets?

**Tip:** When revaluing an asset, ensure that you account for any accumulated depreciation before calculating the surplus.

Learn how to calculate the revaluation surplus in accounting with a property valuation problem. Understand the steps involved in determining the balance on the revaluation surplus from initial cost to revalued amount. Suitable for undergraduate studies and financial accounting.

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