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Ask the Tutor ACCA FR

ACCOUNTING FOR REVALUATION IAS16

Llaila-yama15y ago
Dear Mr Tutor,

Why when revaluating a previous depreciated asset, we have to first reverse the accumulated depreciation provision, and any difference between the revaluation surplus and this depreciation is then added to the asset at cost ?
Many thanks!
MikeLittleMikeLittleTutor14y ago#1
Because, on a revaluation, effectively what we are saying is that we have charged too much depreciation in the past. Therefore, the first part of the revaluation is to eliminate that element of accumulated depreciation which has been " overcharged" and any surplus will be added to the historic cost of the asset
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