Fair Value Model (IAS - 40) and Revaluation Model (IAS - 16)

SASaad A. Dar4y ago

Hello Sir, My question is why we report changes of Fair value in SOPL and of Revaluation in OCI, particularly in the standards catalogued above. Is that because of our difference in intention to use that asset? Thanks!

PP2-D2Tutor4y ago#1

Hi, Yes, you've answered your own question! It is due to the different intent. For PPE we are continuing to use it in the business for the foreseeable future, so won't be realising any gains on it through sale anytime soon. Any gains therefore go through OCI. For IP we are holding it for investment purposes, an alternative to if we were holding shares that we had invested, that we are looking to realise any gains from soon through sale and so any gains/losses go through profit or loss. Thanks,

SASaad A. Dar4y ago#2

Thank you sir!