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I have a question on the item number 6, the PPE purchased by Marchant.
before revaluation, the depreciation is 1.2(12/10years). so after revaluation on 2013, the depreciation is 1.4 (13/9years). the differences of this depreciation is 0.2, but why it is not included when calculated the fall in value charged to revaluation surplus?
my answer for fall in value charged to revaluation surplus is 2m, because i have deducted the differences of 0.2 from the 2.2 revaluation surplus.
and my answer for fall in value charged to profit or loss is 2.6Hi,
When we create the initial revaluation of $2.2 million we then transfer through it any excess depreciation as a result of the new depreciation being charged. We are now charging $1.44 million, when previously it was $0.2 million so there is an adjustment of $0.24 million to process through the revaluation reserve. This takes the reserve to $1.96 million, which is then reduced to zero following the impairment.
I think your understanding of the technical stuff is correct but you’ve rounded the $1.44 million to $1.4 million.
Thanks
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