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Hi!
I actually has some issues concerning disposal of a revalued asset.
I am having unable to understand the logic behind why after disposal, any gains held in reserves are transferred to retained earnings in the SOCIE, i.e, why do we DR revaluation surplus and CR retained earnings.Thanks.
Because the revaluation reserve has a credit balance arising from the original revaluations (debit asset, credit revaluation)
Then, when that revalued asset is sold, the gain is realised so is taken away from the revaluation reserve and credited to retained earnings … because the gain is realised and that revaluation reserve is for any unrealised gains
OK?
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