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Margot
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I am reversing an impaired asset. The cost is $1500 with 10 years useful life. The asset was impaired after 2 years to $800. Therefore impairment is $500.
After year 3 the asset with a CA of $700 net deprecation, was revalued to $1350 (revaluation increase of $650
I will reverse the impairment to the ceiling had the asset not being impaired i.e. $1500 – 450 (3years depreciation) to $1050.
What do I do with the “extra” $300?
Would the treatment be different if the asset us carried at cost model instead of revaluation?
Thank you. All the best in the exam everyone!
P2-D2
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Hi,
It can be used to increase the asset to its new revalued amount and would go through other comprehensive income.
If it was held under the cost model then there would be no revaluation of the asset and it would remain impaired.
Thanks
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