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Hi sir,
Ive looked at two exam questions.
Ashanti for june 10 and marchant for june 14Regarding ppe impairement am confused as in theses ut has been dealt with differently.
In marchant they charge impairement for full 2.2 revaluation surplus (reduce oci) and remaining 2.36 goes to other expense.im comfortable with this
However in ashanti question they didnt use the full revaluation of 2.2 and reduce it from oci they use only1.96 and remaining 1.6 of impairement increase cos and increase oci?
It does not make sense to me at all. Plz help sir
Thanks v much
Hi,
Although the two scenarios look identical, in Marchant they haven’t accounted for the fall in value in TCI but in Ashanti they have.
Also, in Ashanti they have done an annual reserve transfer which changes the amounts that would have been held in OCE.
Thanks
Hi tutor,
Am so sorry but i didnt understand ur answer to my question
Could u plz clarify it in other words / details using the figures so i know how to solve this issue correctly
When do we use each of these diff treatements in which cases ?
I appreciate ur kind assistance
Hi,
It is not a case of when we use the different treatments but a case of what has already been done in the question by the company. It is here that the difference lies in the two questions you’ve been looking at.
Read the two scenarios again and try to look at what has been done differently in each of them. You should hopefully be able to see that in Ashanti it says “The whole of the revaluation loss had been posted to the statement of comprehensive income and depreciation has been charged for the year” which is not correct as some should have gone through profit or loss.
In Marchant they have made no adjustment for the revaluation at all, so there is no need to correct anything.
Thanks
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