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Asset impairment – Revaluation Surplus AC

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Asset impairment – Revaluation Surplus AC

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by P2-D2.
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  • August 16, 2021 at 10:54 am #631725
    eloisedavey
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    Hi, I am just wondering what we do with the revaluation reserve balance that sits within equity on SFP when assets are impaired please ? I get the concept around charging to OCI first and the SPL and then reducing the NCA value, however as the revaluation reserve account is an accumulated ‘unrealised gains’ in revalued assets then surely if an asset is impaired and this gain is no longer likely to be received then don’t we need to do something to reduce this balance? Otherwise this balance would be overstated as we know it will never be realised? Thanks

    August 19, 2021 at 10:04 pm #632265
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7149
    • ☆☆☆☆☆

    Hi,

    Yes, as the impairment goes through OCI this will then reduce the revaluation surplus within the SOCIE.

    Thanks

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