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Highland co

This topic has 1 reply, 2 voices, and was last updated 5 years ago by Stephen Widberg.

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November 12, 2019 at 5:57 pm #552350
niki27
Member
- Topics: 82
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Dear sir,
In the BPP workbook, there is a question named Highland. I have several doubts in the question
In this qn, there is an adjustment that says this
“The property, plant and equipment of Buchan on 30 November 20X7 was valued at $500,000 (book value $350,000) and was acquired in April 20X7. The property, plant and equipment has a total useful life of ten years. Buchan has not adjusted its accounting records to reflect fair values”
In the anser the gain on revaluation 150 is not included in the total comprehensive income but rather in the net assets as a fair balue adjustment. Could you explain why?
November 13, 2019 at 4:47 pm #552488
Stephen Widberg
Keymaster
- Topics: 15
- Replies: 3355
Group is probably using cost model. So no obligation to revalue except for purpose of consolidation as FV adjustment – will increase PPE and reduce goodwill. No impact on OCI.
Extra depreciation charged in subsequent years will reduce group P&L.
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