Chapter 3 Example 1

Yes, you’re correct – it’s a misunderstanding of point (iii)

This is from the question:

“A non-current asset with a carrying value of $130,000 was written down to $95,000. The impairment occurred as a result of general price changes. The revaluation surplus account contains $25,000 relating to this asset.”

When we’re faced with impairing an asset that has, in the past, been the subject of a revaluation increase, we must first of all use up that revaluation surplus (sitting in the Revaluation Reserve)

If the impairment exceeds that element of the Revaluation Reserve, then we take the excess to Statement of Comprehensive Income

So we need to write off $35,000 from this non-current asset. Step by step this would involve:

Dr Revaluation Reserve $25,000
Cr TNCA $25,000

and then …

Dr Statement of Comprehensive Income $10,000
Cr TNCA $10,000

How’s that?