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Q.kat has a year end of 31st dec.
On 1 jan 2009 , it classified one of its freehold prop as held for sale.At the date the prop had a carrying amount of £667000 and had been accounted for according to the revaluation model. Its fair value was estimated at £825000 and the costs to sell at £3000.In accordance with IFRS5 what amounts should be recognised in the financial statements for the year ended 31 dec 2009?
Answer given is SOPL impairment £3000
Revaluation gain £158000I dont understand why revaluation gain is not netted of against with impairment resulting in a revaluation gain of 155000.
Can u pls explain me the reason.If you follow this link “https://www.iasplus.com/en/standards/ifrs/ifrs5” and read the section with the title Measurement (it’s too long to cut and paste … easier for you to follow the link) I believe that that explains it
Basically, immediately before reclassification the asset is revalued to fair value with any surplus going to revaluation reserve
Subsequent to classification the asset is re-assessed to find fair value less disposal costs with that difference written off to statement of profit or loss
OK?
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