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Dear Chris,
I would like to clarify some doubts regarding revaluation of PPE, referring to Example 2 of that topic.
1. Referring to the table shown, I do not understand why do we have to find the excess depreciation for the revaluation reserve. Is it to find out the “loss” from depreciation due to the revaluation of PPE?
2. Is the impairment loss stated in OCI = revaluation loss?
Thank you in advance and I hope to hear from you soon!
Hi,
1. We calculate the excess depreciation so that we can make a reserve transfer for it in the SOCIE.
2. An impairment loss will go through profit or loss, unless it is being impaired following a previous revaluation. The revaluation gain will have gone through OCI and so the impairment will now go through OCI to match up the previous gain.
Thanks
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