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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?
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
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.
@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?
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 –