OpenTuition | ACCA | CIMA
Free ACCA and CIMA on line courses | Free ACCA, CIMA, FIA Notes, Lectures, Tests and Forums
Spread the word
If you have benefited from our materials, please spread the word so more students can benefit.
To help us keep materials up to do and add new content you can also donate
May 6, 2020 at 3:44 pm
we are left with reserves 3850. Now we have a decrease in an asset by 4250(12250-8000), so we will charge 3850 from reserves and the excess 400 (below the historical cost) from P/L entry will be—- DR Reserve 3850 DR P/L 400 CR PPE 4250
my question is that if we are decreasing reserves by 3850, how can we charge 3850 from OCI also in SPLOCI? Kindly answer
January 6, 2020 at 11:32 pm
Why did $400 go to SPL and $3,850 go to OCI? I understand how you calculated the figures but I don’t understand the principle between placing these amounts respectively to SPL and OCI.
January 31, 2020 at 9:52 am
400 is the amount over and above the reserve available so charged from SPL and rest of the amount from OCI.
October 1, 2019 at 3:15 pm
Thank you Open tuition.
September 30, 2019 at 7:36 am
Dear sir, the impairment in SPL , where is recognized (example 2)?Thanks in advance for all the material and guidance through lections.
April 28, 2019 at 10:58 am
For this example, you mentioned removing $3,850 from Revaluation Surplus and the remaining $400 will be charged from P&L directly. Understood that the original Revaluation Surplus of $4,400 have been reduced by $550 due to the $1,750 Depreciation Charge occurred during the year, hence the balance of $3,850.
Does this imply that the $550 have been reduced from the Revaluation Surplus and moved into Retained Earnings to offset the “additional” Depreciation?
January 31, 2020 at 9:53 am
That’s correct and that’s the requirement of IAS 16.
April 18, 2019 at 11:02 pm
What about revaluation reserve on SFP? You have debited the OCI but there is still 3850 in reserve.
March 12, 2019 at 12:03 pm
About right!!video is self explanatory….gr8 job
December 12, 2018 at 9:21 am
Hi Sir. Thanks so much for this detailed explanation but how are we going to do all these workings in time pressured conditions as in the actual exam? Aren’t these too many workings just for a small question that could come as a part of a larger consolidation question which would take even more time? Is there any way for us to make it shorter for exam?
September 17, 2018 at 7:31 am
Hi, Had there been no impairment, this would have been the case. We would have transferred 550 to the retained earnings as compensation to the shareholders for increased depreciation which lowers their earnings.
Now if its a case of impairment, we make up for the loss first from Reval reserve i.e. 3850 and 400 from P/L (or an adjustment from retained earnings i.e. 550-400). So hereby we are left with 150 in retained earnings even after covering for the impaired value. So basically we gained in total 4400-4250=150. Where is the treatment for it? And shouldn’t be it also included under the head OCI?
September 17, 2018 at 7:24 am
Historic Cost Reaval. Model Reval. Reserve ———————————- —————— ——————- —————– Cost(1.1.13) 12000 Acc Dep -2400 CV (31.12.14) 9600 14000 4400 OCI=4400 Dep -1200 -1750 -550 Dep=1750 CV 8400 12250 3850
T/f to retained earnings=550 ————————————————————————————————–
Now if its a case of impairment, we make up for the loss first from Reval reserve i.e. 3850 and 400 from P/L (or an adjustment from retained earnings i.e. 550-400). So hereby we are left with 150 in retained earnings even after covering for the impaired value. So basically we gained in total 4400-4250=150. Where is the treatment for it? And shouldn’t be it also included under the head OCI? Historic Cost Reaval. Model Reval. Reserve ——————————— ——————- ———————- ——————- Cost(1.1.13) 12000 Acc Dep -2400 CV (31.12.14) 9600 14000 4400 OCI (gain)=150 Dep -1200 -1750 -550 Dep(SPL)=1750 CV (Before) 8400 12250 3850 OCI(impairment)=3850 Impairment -400 -4250 -3850 SPL(impairment)=400 CV after 8000 Nil
September 4, 2018 at 11:45 am
It might be worth mentioning that a revaluation surplus (gain) should be credited to a revaluation surplus (reserve), via other comprehensive income, whereas a revaluation deficit (loss) should be expensed immediately (assuming, no previous revaluation of the asset has taken place).
Thanks for all the resources
August 25, 2018 at 10:38 pm
Hi Chris In example 2 on Revaluation decrease when the impairement takes place (on 31.12.2015) we have the following balances: PPE dt 14 000 Acc.depr. ct 1 750 (Depr. exp. dt 1 750) Reval. reserve/surplus ct 3 850 Retained earn. ct 550
Is that right? So, we should credit PPE acc with 6 000 but where should go debits – to accum. depr. (1 750)and rev. reserve (4 250) accounts? Please, could you specify which accounts and with what amounts will be affected? Thank you!
July 29, 2018 at 7:38 am
The working you’ve shown in the video is so helpful. Thank you so much sir!
July 9, 2018 at 8:55 pm
why we take -ve 3,850 ? how we can figure it out that this amount is impaired? what is the nature of revaluation account, is it represents income head or expense head cause of loss?
July 10, 2018 at 9:02 am
Hello, I think the easiest way to understand which amount is impaired to OCI or P/L is to always think about the “historical” carrying amount (CA). In the last year the “historical” CA was $8400 and the new CA was $12250. Any amount that falls up to “historical” CA is always imparment in OCI. If the amount falls below “historical” CA, then it is an impairment in P/L (loss!). In this example, the new CA falls from $12250 to Fair Value $8000. 1) consider any impairment up to “historical” CA: $12250 – $8400=$3850 in OCI 2) consider any impairment below the “historical” CA : $8400 – $8000 = $400 in P&L
When I do the revaluation examples, I always imagine a waterfall which falls up to “historical” CA , stops there, and continues to flow below the “historical” CA.
P.S. CA is Carriyng Amount = Carriyng Value
July 12, 2018 at 6:17 pm
Well ! Thank you for reply i understand but i need some clarity i am focusing on it again if i have any other dought will ask again.
July 9, 2018 at 8:52 pm
why we take -ve 3,850 ? how we can figure it out that this amount is impaired? what is the nature of revaluation account, is it represents income head of some expense cause of loss?
June 21, 2018 at 12:51 pm
Dear Sir, The asset was revalued for $14m on the last day of the accounting year, yet the dep. charged was for full year ($.55M). If the asset was taken into account on the last day, will we still charge dep on it for the whole year?
June 21, 2018 at 12:59 pm
dep figure is $1.75 m,
June 21, 2018 at 8:31 pm
I’m pretty sure that this is correct as we are trying to find the carrying value at the end of December 2015 before the impairment down to $8 million. The revalued asset ($14 million) is depreciated over its remaining useful life (8 years) to give the $1.75 million for the year to December 2015.
You must be logged in to post a comment.