cases of revaluation — OpenTuition Forums

MMax6y ago

Sir there is 1-2 confusion regarding revaluation 1) If suppose company's year end is 31 dec 20X7. And on 1 Jan 20x7 the property has NBV of 10000.And from 1 Jan 20x7 to 31 Aug 20x7 depreciation expense is 800. And now on 1 oct 20X7 it revalued its property to 8000. So here as we know that there has been revaluation loss of $1200. Now 1 thing I want to ask that here the entry for it would be dr P&L 1200 cr Property 1200 but this revaluation loss of 1200 will go in statement of profit or loss OR would it go in OCI for year ended 31 dec 20X7? 2) Suppose the same above scenerio still holds, however there is 1 slight change in it i.e there was a revaluation reserve of 6000 on 1 Jan 20x7. And now same scenerio still applies. Now 1 thing I want to ask that here the entry for it would be dr revaluation reserve 1200 cr Property 1200 but this revaluation loss of 1200 will NOT go either in statement of profit or loss OR in OCI for year ended 31 dec 20X7. Right? 3) Suppose the same original scenerio still holds, however there is 1 slight change in it i.e there was a revaluation reserve of 1000 on 1 Jan 20x7. And now same scenerio still applies. Now 1 thing I want to ask that here the entry for it would be dr revaluation reserve 1000 dr P&l 200 cr Property 1200 But here can you please tel that loss of 200 will go in statement of profit or loss OR would it go in OCI for year ended 31 dec 20X7? Similarly revaluation loss of 1000 will NOT go either in statement of profit or loss OR in OCI for year ended 31 dec 20X7. Right?

PP2-D2Tutor6y ago#1

Hi, 1) It would go through profit or loss unless it has been revalued upwards previously, in which case it would go through OCI. 2) As the asset has been previously revalued then the loss would go through OCI. 3) The 1,000 goes through OCI and the remainder through profit or loss. Thanks

MMax6y ago#2

1) In first case revaluation loss of 1200 will be taken as an expense in P&L? 2) In second case as there was revaluation reserve of 6000 on 1 jan 20x7 and there has been revaluation loss of $1200 in current year, so can you please tel me that what fig we will show as an expense in P&L, and what fig we will show in OCI in statement of profit or loss and other comprehensive income? 3) In third case as there was revaluation reserve of 6000 on 1 jan 20x7 and there has been revaluation loss of $1200 in current year , so can you please tel me that what fig we will show as an expense in P&L, and what fig we will show in OCI in statement of profit or loss and other comprehensive income? For all these 3 cases I am asking their effect in statement of profit or loss and other comprehensive income, (NOT in SOFP)

PP2-D2Tutor6y ago#3

Hi, I've explained the first one, so I don't understand why you are asking the question again. for the second two, why don't you try and solve it yourself and ask me if you're correct as opposed to just asking me to do it for you. You'll find it a much better way of learning and will allow you a better understanding of the topic. Thanks P.S. An attitude of gratitude goes a long way, and it appears that you seldom demonstrate that you have one. Never do you ever acknowledge my replies with a thank you, and I'm finding it rather rude that you then just demand further answers without doing much yourself. Thanks

MMax6y ago#4

I am thankful to you sir for replies. And at the same time I apologize if you found my behaviour rude. But sir thing which is confusing me in these cases is it effect on statement of profit or loss and other comprehensive income, although I know how to make double entries in these cases, but still thing which which is confusing me in these cases is its effect on statement of profit or loss and other comprehensive income 1)In first case there was revaluation loss of 1200, so as we debit P&L and credit Property, so this 1200 loss we will show as an expense in statement of profit or loss OR would we show it in other comprehensive income as loss in statement of profit or loss and other comprehensive income ? 2) In second case as there was already revaluation reserve of 6000 on 1 jan 20x7 and in current year we have made entry of dr revaluation reserve 1200 and cr Property 1200, so here in statement of profit or loss and other comprehensive income would we show 1200 or 4800?

PP2-D2Tutor6y ago#5

Hi, I think you're struggling with the fundamentals of what the primary financial statements are. The statement of profit or loss and other comprehensive income effectively consists of to parts. The first part is the statement of profit or loss, the second is other comprehensive income. So, in the first case the 1,200 is recognised through profit or loss. This means that the amount is shown in the statement of profit or loss as an expense. On the second point, the 1,200 will go through other comprehensive income, which when this is transferred to the statement of changes in equity will reduce the 6,000 opening balance on the revaluation reserve to 4,800. Thanks