Struggling with a question please help depreciation and revaluation

[pauljaco]

Hi All

Im am struggling with a part of a question from the pilot paper in F3 Uk version from the ACCA website.

the question is as follows

At 31 December 2004 Q, a limited liability compnay owned a building that cost 800,000 on 1 January 1995. It was being depreciated at 2% per year

On January 1 2005 a revaluation to 1,000,000 was recognised. At this date the building had a remaining useful life of 40 years

What is the depreciation charge for the year ended 31 december 2005 and the revaluation reserve balance as at 1 Jan 2005?

Depreciation charge revaluation reserve at 1 jan 2005

a. 25000 200,000
b. 25000 360,000
c. 20000 200,000
d. 20000 360,000



The answer is as follows

1,000,000 / 40 years = 25000;

1,000,000 - (800,000- (800000*2%*10 years)) = 360,000

so the answer is B

But i really dont get where the 10 years has come from can anyone help please?

[hariharm]

Since the asset was purchased on Jan 1 1995, and it is now Dec 31, 2004 (or Jan 1, 2005), the building has been depreciated for 10 years.

Hope it's clearer now :)