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- August 19, 2017 at 4:29 am #402412
I have a question on IAS 16 PPE Revaluation Model, regarding the depreciation.
If the PPE been revalued up to an amount, the revaluation surplus will increase the annual depreciation charges, so we are given option to transfer the excess depreciation from Revaluation Reserve to Retained Earnings. However, If the PPE be revalued down to an amount, do we need to adjust for any depreciation on the REVALUATION LOSS in SOPL for the subsequent years?
Here is an example of question:
Carrying Value on 2016: $9000
Revalued Amount on 2016: $8000
Revalued Amount on 2017: $10000
Depreciation & Expected Useful Life: Straight Line basis for 10 yearsFor 2016, we Dr SOPL and Cr PPE by $1000 due to revaluation loss, correct?
For 2017, there is a revaluation gain of $2000. However we need to Credit the previous revaluation loss in SOPL before we can Credit Revaluation Surplus in SOCI, correct?
But, what is the amount we can Credit from SOPL(Revaluation Loss), do we need to adjust for depreciation?
Please Help and thank you !
August 20, 2017 at 5:30 pm #402676Hi,
Once the asset has been impaired the new depreciation is charged on the carrying value over the remaining life.
Any subsequent revaluation is firstly taken to profit or loss up to the value the asset would have been if it hadn’t have been revalued, with any extra taken through other comprehensive income.
Thanks
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