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Hi Mike,
When there is additional depreciation arising from the revaluation of PPE, why it will Cr. R.E.? I can’t think through it. I checked IAS 16 PPE, I can’t find the answer myself.
Thanks,
QinI can think out now, it offset part of revaluation surplus.
BUT
1. when the prior revaluation surplus can’t completely offset subsequent impairment loss. WHY the remaining balance of impairment loss Dr. OCI first then Dr. R.E.? Why in this oder?
2. when the revaluation surplus is the reversal of prior revaluation decrease (expense), what’s the double entry? Dr. PPE XXX , Cr. R.E . XXX?
sorry, one more
3. when disposing the revalued asset, “any revaluation surplus may be transferred directly to R.E.. The transfer to R.E. should not be made through P&L” What does it mean not be made thru P&L?
NO MORE,
Thanks,
Qin1) eliminate revaluation reserve first with any excess coming from profit or loss. Why? Because there’s no point in keeping the revaluation reserve when the asset to which it relates has been impaired by more than the related revaluation surplus
2) Dr PPE, Cr Revaluation Reserve
3) It means that the transfer from Revaluation Reserve to Retained Earnings will be effected through the Statement of Changes in Equity and NOT through the body of the Profit or Loss Account
Ok?
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