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“When a revalued asset is disposed of, any revaluation surplus may be transferred directly to retained earnings,or it may be left in equity under the heading revaluationsurplus. The transfer to retained earnings should notbe made through profit or loss”
I don’t understand why the revaluation surplus can be transferred directly to retained earnings but not recorded as revenue in Income statement then transferred to retained earnings.When the revalued asset is disposed,if it aren’t fully depreciated, how will we deal with the revaluation surplus that still left in equity under the heading “Revaluation surplus” and record the revenue of this disposal ?
Hi,
Why we would we be looking to record revenue when we haven’t sold anything? We have simply revalued the asset, with the gain going through OCI.
When we then dispose of the asset the balance remaining on the revaluation surplus is transferred to retained earning via a reserve transfer in the SOCIE.
Thanks
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