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Hi Sir, may I knw what is the difference between fair value model in investment property and revaluation model in PPE? other than fair value model don’t have depreciation whereas revaluation model have depreciation.
If there is a gain in the fair value model for Investment property, is it the gain is also called it as gain on revaluation which is the same for revaluation model for ppe???
If there is a loss in the fair value model for investment property , it will show it as an expense under profit and loss. However, If there is a loss in the revaluation model for PPE, it will also show it as an expense under profit or loss. So what is the difference btw these 2 ??
Can clarify in details to me?
How did these 2 models presented in the financial stmts?
ThanksI suppose the big difference is where there is a gain in the value of an asset
If it’s an investment property, that gain will go through profit or loss whereas if it’s a gain for a non-investment asset held under the valuation model the gain will be credited to a revaluation reserve
Treatment of losses – investment property the loss goes to profit or loss
If it’s a non-investment property held under the valuation model the loss goes initially against earlier surpluses still in revaluation reserve and then any excess is expensed through profit or loss
So, depreciation is different (as you have pointed out)
Treatment of gains is different (as I have just pointed out)
Treatment of losses is also different (again, as I have just pointed out)
Your post asks for “the difference between fair value model in investment property and revaluation model in PPE?”
Of course, it’s not simply the accounting treatment that is different – it’s not available to treat a property as an investment property unless it satisfies the basic criteria for that classification to be appropriate
Does that answer you?
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