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Dear sir,
Another question regarding IAS 40 from the BPP revsion kitCarter vacated an office building and let it out to a third party on 30 June 20X8. The building had an original cost of $900,000 on 1 January 20X0 and was being depreciated over 50 years. It was judged to have a fair value on 30 June 20X8 of $950,000. At the year end date of 31 December 20X8 the fair value of the building was estimated at $1.2 million. Carter uses the fair value model for investment property.
What amount will be shown in revaluation surplus at 31 December 20X8 in respect of this building?
My question is if revalued upwards once, is there any rule that states that the 2nd increase should not be put in the revaluation surplus?
Thanks!
“is there any rule that states that the 2nd increase should not be put in the revaluation surplus?”
Yes, IAS 40 says that any subsequent revaluation gain on an investment property should go through statement of profit or loss
“Gains or losses arising from changes in the fair value of investment property must be included in net profit or loss for the period in which it arises. [IAS 40.35]”
OK?
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