Alba plc sold a non-current asset on 7 July 2015 for £200,000.

The asset has been bought for £100,000 there years before, on 1^st July 2012, when it was estimated to have a life of 10 years.

The company uses the revaluation model for this class of asset and, on 1^st July 2014, undertook a revaluation.

At that date the fair value of this individual asset was deemed to be £150,000.

The company uses the straight line depreciation method.

Required:

Show how the depreciation and profit or loss on disposal is accounted for in the Statement of Profit or loss (Income Statement). Also, how the asset value and reserves are reflected in the SFP (Statement of Financial Position) for the years ended 30 June 2013, 2014, 2015 and 2016.

Discuss the impact on relevant accounts throughout your answer.

Note: Alba plc chooses not to transfer any excess depreciation on revaluation

Answer rating: 100% (QA)

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