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An entity purchases a non-current asset which costs 10000 $. after 1 year it was revalued to the amount of 12000 $. (ignore depreciation)
DR non-current asset – 2000
CR revaluation surplus – 2000
the next year if the entity calculates impairment loss at a cost of 2000, how we do double entry? Dr revaluation surplus or Dr impairment loss? can we reduce tha amount of 2000 from revaluation surplus ?“can we reduce tha amount of 2000 from revaluation surplus ?”
Not only ‘can’ you … you must!
It becomes more complicated when you have amortisation involved as well but, based on your post, the answer is yes, you must take the $2,000 impairment from the related credit balance in the Revaluation Reserve
ok. i supposed we only deduct the amount of loss in revaluation from revaluation surplus, and so we are eligible to offset impairment loss with revaluation surplus balance. thank you
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