Holderness Ltd prepares its final accounts to 31 December. The company bought a building on 1 January 20X7 for £520,000. Its depreciation policy on buildings has always been to depreciate at 5% p.a. on a straight line basis, but no depreciation is charged in the year of a disposal.

When preparing the Final Accounts for the year ended 31 December 20X8, before any depreciation had been charged for that year, it was decided to revalue the building to its estimated replacement cost of £800,000. On 1 September 20X9, the company sold the building for £750,000.

Required

(a) Write up the ledger accounts for the years ended 31 December 20X7 to 20X9, including all opening and closing balances, for:

• asset cost account

• provision for depreciation account

• revaluation account

• sale of asset account.

(b) Indicate how the balances would be dealt with in the Final Accounts at 31 December 20X9.

(c) Briefly outline the alternative bases of valuation that Holderness could have used at 31 December 20X8, instead of replacement cost.