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Hi Chris,
By referring the notes and first lecture of IFRS-5, its is clearly stated that the subsequent sale of the asset will give rise to a profit/loss on disposal.
However in your second video on example-1 NCA-HFS you explained little bit about how we are gonna treat when the property will be disposed of and the net profit will go through OCI – revaluation surplus – transfer will be made to retained earnings but not SPL.
Could you please explain why is that ?Also on 12/31/2015 an impairment amount was adjusted through reserve, could you please confirm if they would have made a gain instead of impairment then should we follow the same treatment by adding them into reserve and transfer to OCI and then transfer the same amount to OCE?
Thanks!
In the year of disposal there will be a profit in the profit and loss account being the difference between the carrying amount and the final proceeds. In addition any remaining balance on revaluation reserve would be transferred to retained earnings. However it seems that the examiner is no longer interested in asking people about reserve transfers, so don’t spend time on that.
In 2015 you would adjust for any further impairment – but no further revaluations upwards would be posted – this is now a current asset which will shortly be sold
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