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Dear Tutor,
Can you pls help / direct me to correctly understand Asset revaluations.
My understanding is that when an asset is revalued;
If surplus;
Dr Asset
Cr Reval. reservevisa versa if deficit.
Any amount for period in the reval reserve will show up in the period’s ‘other comprehensive income statement’
All except where revaluation loss is greater than what is in the reserve / or if surplus reverses a prior loss – then instead of crediting / debiting reserve amount is taken to Income statement.
I have looked at Llama Dec 2007 F7 Q2.
How would one know that this $3M reval deficit is to go to ‘other comprehensive income’. (i.e not be charged to Income statement)? Is it because the question does not convey the balance of the revaluation reserve?
Your response is much appreciated as I need to get a clear rule for exam questions of when the income statement is charged and when the amount show’s up in ‘Other comprehensive Income.’
Your summary is absolutely correct except…..my understanding is that, if there is no previous upwards revaluation and therefore no Revaluation Reserve, then any new deficit / impairment should go through SofI.
I don’t have Llama in front of me so I’ll need to check when I next get into the office.
Sorry if that’s incomplete 🙁
Hi,
Thanks for your response. I also posted this on the general F7 forum and there was actually a part of the solution to Llama that I overlooked. The balance on the revaluation reserve Is in the trial balance for $14M, so the $3M deficit is charged to that and shows in other comprehensive income.
hi gutsychyk i have not seen the question for hosterling can you down it for me.email is sthompson@jamenergy.com
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