profit on disposal of the building is 93,478/-.
Transfer of 120,522/- from Revaluation gain to Retained earnings when it is sold.
Please confirm the answer.
Thank you
Regards,
Zaid
S
Sameh·
Hello, and thanks for the useful lectures.
I would like to point out that on the first example of revaluation, the useful life of the building is 25 years. 2years later it was revalued to $600,000. The new depreciation charge calculations would be dividing the $600,000 by 22 years and not 23, as an year have already passed (31 Dec 20x7). I think the new dep chg should be $27,273, and the CV of the building being $572,728.
Kindly confirm.
Best Regards
M
Mohamed Saad·
?
A
ayobest·
IFRS 19 - Accounting for Coronavirus Pandemic
Objectives
The objective of IFRS 19 is to prescribe accounting treatment for Covid-19. The principal issues are the timing and manner in which the virus can be contracted.
The standard also provides guidance on methods to be adopted to stay safe.
Scope
The standard applies to accounting treatment for Covid-19 except Ebola, Typhoid Fever, Diabetes, Pneumonia, Cancer, Malaria, etcetera.
Technical Definition
Coronavirus also known as Covid-19 is a present disease contracted as a result of past events from which the victim is expected to die or recover.
Recognition Criteria
For coronavirus to be recognized, three conditions must be met:
? There is a present disease known as Covid-19, contracted as a result of past events.
? It is probable that self isolation, quarantine or evacuation to isolation center will be required to treat the patient based on symptoms such as high fever, cough, sneezing, difficulty in breathing, etcetera or upon testing positive to the virus.
? The cost of treatment can be reliably measured.
Measurement Criteria
Coronavirus are measured at the best estimates of the expenditure required to treat the disease.
The best estimate will be:
? The most likely amount required to treat a single patient.
? An expected value for a large population of patients.
Both measurements are not discounted to present value because of complications that may arise.
In reaching the best estimates, considerations should be given to risks and uncertainties.
Derecognition
Coronavirus patient shall be discharged or derecognized:
? Upon death or recovery. Whichever is earlier.
? When no future outflow of economic resources will be required to treat the patient.
? When it was discovered that the patient was actually suffering from Malaria or Typhoid Fever.
Disclosures
? The number of confirmed cases. This should be classified into age, gender, race, travel history, etcetera.
? The number of recoveries.
? The number of deaths recorded.
? The total amount of Covid-19 related donations.
? The total amount spent.
Staying Safe
? Use of face masks at public place.
? Regular washing of hands with soap.
? Use of alcohol based hand sanitizers.
? Observe social distancing.
? Avoid crowded places.
? Think everyone is a suspected carrier of the virus.
Composed by:
Ayomi Ladokun
First Choice Academy, Nigeria
O
Olufemi·
Historical cost depreciation comes $32000
revaluation depreciation comes to $43478
meaning we would have Accumulated depreciation of $75478 As at 31/12/20x8
My question is why deduct revaluation depreciation from historical depreciation to equal $64000 like revaluation never occurred and netting the difference from revaluation balance ?
N
Nicola·
I think that after the first revaluation at 500k you should Dr the 32k of accumulated depreciation so, when you sell the asset you should only have 43478 in the Acc. dep balance.
So my guess will be something like
Dr Cost 50000
Dr Acc Dep. 43478
Cr Other Comp Income 93478
E
euginebernard·
Hi, The gain on disposal should be calculated based on the revalued figure less depreciation or Historic cost less depreciation? thanks
P
P2-D2Tutor·
Hi,
The gain on disposal is calculated by comparing the proceeds to the carrying value of the asset. The carrying value will be that of the revalued asset.
Thanks
R
Rajaa·
is the correct journal entry the following please:
Dr. Revaluation surplus 120,520
Cr. Retained earning 120,520
please confirm
P
P2-D2Tutor·
Hi,
Yes, this is correct.
Thanks
P
P2-D2Tutor·
Hi,
In an exam it would specifically say what to do. If it didn't then I'd assume they do have the policy as it is beneficial to the shareholders to do so given it increases their distributable reserves.
Thanks
E
Edith·
Hi,
My understanding is that the entity has a choice whether to transfer the depreciation difference from RS to RE or not.
However in your example it seemed you just did it anyway without explicitly stating that this is the entity's policy. What shall I do in an exam situation?
profit on disposal of the building is 93,478/-.
Transfer of 120,522/- from Revaluation gain to Retained earnings when it is sold.
Please confirm the answer.
Thank you
Regards,
Zaid
I would like to point out that on the first example of revaluation, the useful life of the building is 25 years. 2years later it was revalued to $600,000. The new depreciation charge calculations would be dividing the $600,000 by 22 years and not 23, as an year have already passed (31 Dec 20x7). I think the new dep chg should be $27,273, and the CV of the building being $572,728.
Kindly confirm.
Best Regards
Objectives
The objective of IFRS 19 is to prescribe accounting treatment for Covid-19. The principal issues are the timing and manner in which the virus can be contracted.
The standard also provides guidance on methods to be adopted to stay safe.
Scope
The standard applies to accounting treatment for Covid-19 except Ebola, Typhoid Fever, Diabetes, Pneumonia, Cancer, Malaria, etcetera.
Technical Definition
Coronavirus also known as Covid-19 is a present disease contracted as a result of past events from which the victim is expected to die or recover.
Recognition Criteria
For coronavirus to be recognized, three conditions must be met:
? There is a present disease known as Covid-19, contracted as a result of past events.
? It is probable that self isolation, quarantine or evacuation to isolation center will be required to treat the patient based on symptoms such as high fever, cough, sneezing, difficulty in breathing, etcetera or upon testing positive to the virus.
? The cost of treatment can be reliably measured.
Measurement Criteria
Coronavirus are measured at the best estimates of the expenditure required to treat the disease.
The best estimate will be:
? The most likely amount required to treat a single patient.
? An expected value for a large population of patients.
Both measurements are not discounted to present value because of complications that may arise.
In reaching the best estimates, considerations should be given to risks and uncertainties.
Derecognition
Coronavirus patient shall be discharged or derecognized:
? Upon death or recovery. Whichever is earlier.
? When no future outflow of economic resources will be required to treat the patient.
? When it was discovered that the patient was actually suffering from Malaria or Typhoid Fever.
Disclosures
? The number of confirmed cases. This should be classified into age, gender, race, travel history, etcetera.
? The number of recoveries.
? The number of deaths recorded.
? The total amount of Covid-19 related donations.
? The total amount spent.
Staying Safe
? Use of face masks at public place.
? Regular washing of hands with soap.
? Use of alcohol based hand sanitizers.
? Observe social distancing.
? Avoid crowded places.
? Think everyone is a suspected carrier of the virus.
Composed by:
Ayomi Ladokun
First Choice Academy, Nigeria
revaluation depreciation comes to $43478
meaning we would have Accumulated depreciation of $75478 As at 31/12/20x8
My question is why deduct revaluation depreciation from historical depreciation to equal $64000 like revaluation never occurred and netting the difference from revaluation balance ?
So my guess will be something like
Dr Cost 50000
Dr Acc Dep. 43478
Cr Other Comp Income 93478
The gain on disposal is calculated by comparing the proceeds to the carrying value of the asset. The carrying value will be that of the revalued asset.
Thanks
Dr. Revaluation surplus 120,520
Cr. Retained earning 120,520
please confirm
Yes, this is correct.
Thanks
In an exam it would specifically say what to do. If it didn't then I'd assume they do have the policy as it is beneficial to the shareholders to do so given it increases their distributable reserves.
Thanks
My understanding is that the entity has a choice whether to transfer the depreciation difference from RS to RE or not.
However in your example it seemed you just did it anyway without explicitly stating that this is the entity's policy. What shall I do in an exam situation?
Thanks