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ACCA P2 Property, plant and equipment (IAS 16) – Revaluation increase
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Can anyone explain why we need to do the reserve transfer? And what is the difference of the RE in SOCE and in SFP? If the change in RE happens in SOCE do I have to change the figure of RE in SFP at the same time.
So confused. Please help. Thank you
superb tutoring and funny too.
sir, i have a question , i got confused at the beginning, where you talked about unwinding a provision up to its terminal life. how dies on exactly unwind a provision?
Dear Sir
Please help me understand something in example 1.
We got a gain on revaluation of 27million. The journal entries for the revaluation gain will be (Dr PPE 27m Cr Revaluation Reserve 27m)… In your explanation you said there is a Cr of 27m that goes to OCI from the gain on revaluation, where will that be coming from and what will be the debit entry for it?
Depreciation for the year will be 5.6, the journal entries are (Dr Profit and Loss 5.6, Cr PPE 5.6)…. In your explanation you said we Dr Revaluation Reserve with excess depreciation of 1.6. Where will the excess depreciation come from if we Dr P/L with full depreciation of 5.6? What will be the credit entry for the excess depreciation?
The debit entry for OCI is Asset itself. And revaluation reserve is placed in OCI, so same and one thing.
For depreciation we charged extra depreciation after revaluation, so we the organisation has a choice to transfer those extra charges to Retained Earnings, which is done in Statement of changes in Equity. So, we just simply transfer 1.6 from revaluation reserve to Retained Earnings. Its just transferring of extra dep.