PPE – revaluation downwards – ACCA Financial Reporting (FR)
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I don’t get why we expense the impairment before debit reserve surplus…Since we have 4,400 reserve surplus at 31.12.2024, aren’t we supposed to dr it first before we move to P&L and expense the whole thing?
Why do we account for deprecation in year 2014 when the asset is revalued upward, but we don’t account for deprecation in year 2015 when the asset is revalued downward? It seems selective…and I don’t understand why….
Chris mentioned in the lecture prior to this one that any excess depreciation charged due to revaluation of PPE is to be charged from the reserve(the reason is given in detail there so go watch it), regarding your question as to why we don’t depreciate in 2015 based on the new Carrying value it is specifically because of the date the PPE was revalued on, it being 31 dec 2015. Since it was revalued at the end of the year we therefore will not depreciate the new Carrying value for this year rather we will do it for the year 2016. But that is not asked in the question. So chris was not simply just selecting numbers at random. Hope this solved your doubt :]
why isn’t the value in the accumulated depreciation account eliminated when revaluing down the PPE to $8m?
IS THERE ANY DIFFERENCE BETWEEN REVALUATION LOSS AND IMPAIRMENT?
Hello Sir,
What about accumulated depreciation do we have to Dr Acc Depreciation and Cr PPE (Then only it will come to 8000) and;
Thank you for your lectures
Hi Chris,
Why are we debiting £3850 in OCI but not in Revaluation reserve??
Please I don’t understand where the excess depreciation is from at 10:22
Hello Chris,
Please why do we have to use up $3,850 in the reserve?
I think that´s because the revaluation reserve was 4,400; the excess depreciation was 550; thus the balance was 4,400-550=3,850 that needs to be used up / removed because of the revaluation decrease / impairment. Thus, we debit by 3,850 the revaluation reserve but the value of the impairment was 4250. Then 4250-3850=400 impairment that goes to PL.
Hi Chris,
Would you kindly clarify why you’re saying that all of $3,850 in the revaluation reserve is going to be used?
And where are the entries for accumulated depreciation & depreciation?