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plz help with this.
1-when an asset is revalued upward under ias 16 it goes to reval resv and oci right? so does that mean that we dr the asset with the increase and credit both the oci and the reval resv? doesnt that mean we end up with 2 credits? how will the accounts balance?2- an amount is taken out from the reval resv and transferred into the retained earnings each year. – do i need to add this amount to the p&l?
3- do i also need to take out a certain amount from the oci as well each year? and if so, what am i supposed to do with it.
have been trying to understand this for the past couple of days and am at my wits end now. thank you
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My understanding is that,
When a non-current asset is revalued upwards, the gain goes to asset and reval reserve (DR asset / CR reval reserve). The gain is then transferred to retained earnings (not through P&L) as the asset is being utilised. The amount released is the difference between depreciation charged on the revalued amount and the (lower) depreciation charged on the asset’s original cost
The only time when gains are recognised in P&L is when you are looking at investment properties using the fair value model. Any gains or losses from the change in fair value for investment properties are recognised in the P&L.
Hope this helps
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