I would be grateful if someone could just clarify the necessary accounting entries when adjusting for a revaluation. It is probably best explained by using a illustration, therefore say :
Cost b/fwd £100,000
Dep'n b/fwd £4,000
2% straight line dep'n
I have so far adjusted as follows :
DR Cost b/fwd £150,000
DR Dep'n b/fwd £4,000
CR Revaluation reserve £154,000
DR P&L dep'n chg £5,000
CR B/S dep'n chg £5,000
Where I am a little unsure is with regards to the how and where I adjust for the difference in depreciation between the cost and revalued amount. Don't I simply transfer the difference from the revaluation reserve to the P&L ??
Please advise in double entry terms.