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Impairment loss of assets reversal

Forums › ACCA Forums › ACCA SBR Strategic Business Reporting Forums › Impairment loss of assets reversal

  • This topic has 4 replies, 2 voices, and was last updated 1 year ago by mrjonbain.
Viewing 5 posts - 1 through 5 (of 5 total)
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    Posts
  • April 12, 2021 at 11:40 am #617232
    sintijas
    • Topics: 1
    • Replies: 2
    • ☆

    Hi,

    If I had impairment loss in one year, theory says that I have to write off it against profit immediately. D Impairment loss, C Asset. Now my question is – what happens if I have revaluation reserves? As I understand I first have to remove all revaluation surplus and then move to P/L. D Revaluation surplus; C Asset. But do this Revaluation surplus account has to be for each asset separately or I can debit all asset’s impairment loss from one common Revaluation surplus account?

    April 12, 2021 at 12:12 pm #617243
    sintijas
    • Topics: 1
    • Replies: 2
    • ☆

    In short – to record any revaluation surpluses, impairment losses- are there separate Revaluation Surplus and separate Impairment loss account for each asset ?
    Like for example :

    Revalution surplus (building); Revalution surplus (car):
    D C D C etc

    April 12, 2021 at 3:13 pm #617277
    mrjonbain
    Moderator
    • Topics: 1
    • Replies: 1216
    • ☆☆☆☆☆

    No, you can’t do what you have proposed in above question. You would have to connect it to the identifiable asset. Hope this helps.

    April 12, 2021 at 3:43 pm #617281
    sintijas
    • Topics: 1
    • Replies: 2
    • ☆

    @mrjonbain Just to confirm- So in practise we do have separate Revalution reserve and Impairment loss journal accounts for each group of assets?Like for example : Revaluation surplus( building), Revaluation surplus (car) instead of one Revaluation surplus account where we do all entries for all groups of assets right?
    I think In FS reports I have only seen 1 Revalution surplus line item- does it mean – it is summarised of all Revaluation surplus acounts please?

    April 12, 2021 at 8:07 pm #617313
    mrjonbain
    Moderator
    • Topics: 1
    • Replies: 1216
    • ☆☆☆☆☆

    Ultimately, to get accounts right each asset will have to have record of all relevant revaluations, depreciation and impairment associated with asset. If revaluations take place, you are right that whole class of relevant assets has to be revalued to avoid cherry picking. The following link may be of help –

    https://www.accaglobal.com/an/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/ppe.html

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