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If there is loss on disposal of non current asset and at that date there is also a credit balance in revaluation surplus of that asset then what will be the entries on disposal date? can we use the balance in revaluation surplus against loss on sale of asset ? or the balance in revaluation surplus is completely transferred to retained earnings irrespective of the loss or gain on disposal of asset.
please sir explain in both the cases when excess depreciation is transferred to retained earnings and when it is not transferred.
The balance will be transferred to retained earnings (just as the loss on sale will effectively end up affecting the retained earnings because it will have been in the SOPL). There is obviously no point in a balance on the revaluation account remaining if the asset no longer exists!
It is up to the company whether or not to transfer the excess depreciation to retained earnings. They don’t have to, but it obviously makes sense to because it means that the distributable reserves are higher.
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