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Sorry basic question on revaluation increase of an asset.
Using the video example whose carrying value is being increased from 68 to 95 ( a difference of 27):
We credit the revaluation surplus in OCI 27, so far so good.
But the learning materials I’m using simply put the debit as Dr “Asset value (sofp)”
Surely we need to clear out the accumulated depn account?
Would not the full description of the debit be Debit accumulated depreciation 12 (clear out old depn)
and Debit asset 15 (to increase from 80 to the revalued amount of 95) ?In real life do we have two codes in the sofp, one for original cost, and one for revaluation increases? Or do we lump it all in the one code?
Hi,
The full double entry on a revaluation is as follows:
DR Asset – Cost 15
DR Accumulated depreciation 12
CR Revaluation gain (OCI) 27In many of the questions we just take a shortcut by:
DR Asset (CV) 27
CR Revaluation gain (OCI) 27In the accounting records we will have separate T-accounts for both cost and accumulated depreciation, as well as a separate revaluation T-account so we would be processing the full journal above.
Hope that helps, don’t worry about it too much as you wouldn’t see the detail too much at this level.
Thanks
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