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On 1 May 2014, the Hessian group revalued an item of property, plant and
equipment to its fair value of $12 million. The asset cost $10 million on 1 May 2012
and was attributed a ten year useful economic life. The total estimated useful
economic life remains unchanged. The Hessian group has performed a reserves
transfer in respect of the extra depreciation arising from the revaluation.How does this impact cashflow?
I have got the final revalued amount after depreciation of the PPE as $10.5m
and the Reserve of 3.5does the excess depreciation of 0.5m get deducted or add back under operating activities as it gets transferred from OCE to R/E?
The depreciation of 1.5 based on the 8 year life of the $12 million revalued asset gets added back in operating activities
The transfer from revaluation reserve to retained earnings has no affect on the statement of cash flows other than as a part explanation of the retained earnings balance at the end of the year
A surplus on revaluation of a non-current asset will not appear as an item in a statement of cash flows ???? is it true or false??
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