Excess depreciation
Excess depreciation is the difference between depreciation based on a revalued asset and depreciation based on its original cost. An entity may transfer this amount from revaluation surplus to retained earnings as the asset is used. The 400 transfer moves equity between reserves and does not change total equity. The actual depreciation charge remains in the appropriate expense calculation.
Worked example
Depreciation of 1,200 after revaluation compared with 800 on original cost gives an optional transfer of 400.
Common mistake
Recording the transfer through profit or loss or assuming it is compulsory.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| CIMA | F1 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: revaluation transfer