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I have a question in chapter 5 PPE, example 2, if you could help me out understand it please.
I have not clear why we debited the OCI with the amount of 3.850
I understand that when we have revaluation gain the amount goes to OCI, so in 31/12/14 (first revaluation upwards) the gain is 4.400 (OCI)
At the same time, Revaluation reserve should be credited ->4.400 minus 550 = 3.850
I dont understand how OCI went from 4.400 to 3.850. Do we deduct and from OCI the amount of the depreciation loss (-550) as we do in revaluation reserve account?
The 3,850 is the remaining balance in the revaluation reserve after adjusting for the excess depreciation transfer. We can then only use this amount of 3,850 when revaluing the asset downwards, any excess then goes through profit or loss.