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in revaluation model….an asset where previously we charged an impairment loss of 500…..now on revaluation we find out there is a revaluation gain of 2000 on that asset. so will we first reverse the 500 impairment loss and then rest we will take it to revaluation surplus.
entry will be
Dr asset 2000
Cr P/l (impairment) 500
Cr Rev. surplus 1500so basically any previous revaluation loss and impairment charged to an asset needed to be reversed when there is a revaluation gain on that asset….and after reversing …..the left amount will be taken to the revaluation surplus. Am i right ?
another question if we are self constructing an asset…then along with direct material, direct labor n other direct expenses….we will also add the factory overhead based on absorption rate for its initial measurement right?
@sguha said:
in revaluation model….an asset where previously we charged an impairment loss of 500…..now on revaluation we find out there is a revaluation gain of 2000 on that asset. so will we first reverse the 500 impairment loss and then rest we will take it to revaluation surplus.entry will be
Dr asset 2000
Cr P/l (impairment) 500
Cr Rev. surplus 1500so basically any previous revaluation loss and impairment charged to an asset needed to be reversed when there is a revaluation gain on that asset….and after reversing …..the left amount will be taken to the revaluation surplus. Am i right ?
Correct, we take the revaluation to where the impairment was initially recorded and any further increase is then treated in the normal way.
Thanks
another question if we are self constructing an asset…then along with direct material, direct labor n other direct expenses….we will also add the factory overhead based on absorption rate for its initial measurement right?
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