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Hi Sir,
iii) the revaluation surplus relating to this asset is 25,000 and now this asset has to revalue from 130,000 to 95,000 (ie written down 35,000) however why in the ans, there is only 25,000 impairment loss in the Statement of Comprehensive income? How about the 10,000 (35,000-25,000)?
Thanks!
When impairing an asset, the deduction should come first of all from any related previous upwards revaluation
In the case of this asset in your post, there is a previous credit to revaluation reserve of $25,000
In the process of impairing by $35,000, the first $25,000 will be debited to the revaluation reserve and the remaining $10,000 will be debited to statement of profit or loss
These entries HAVE ALREADY been done – the figures given to you in the question for the statement of profit or loss for the year ended 31 December 2009 and the information starts with the words ‘During the year … ‘
OK?
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