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Hi there,
I am stuck with the question above from the current Kaplan exam kit. In the final question which asks for corrections to the spreadsheet prepared by the directors, I noticed that there are no changes to the equity section with regards to both the revaluation gain on the land nor for the revaluation of inventory. My understanding is that the revaluation gain for land from 50m to 60m should go to a revaluation reserve in equity. Why has this not been included in the consolidated financial statement?
Thank you
I don’t have access to the Kaplan version, but the following should help.
When control is obtained FV revaluations must be made, The impact is that the asset (PPE etc) goes up and goodwill goes down. These revaluations NEVER affect reserves.
For more guidance look at my debrief of the question in our exam revision kit live (https://opentuition.com/acca/sbr/) or our course notes.
🙂
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