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Investment Property and change of use.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Investment Property and change of use.

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • August 4, 2021 at 3:36 am #630325
    7fsa
    Participant
    • Topics: 58
    • Replies: 41
    • ☆☆

    Dear Chris,

    I hope you are well and safe,
    in regard to your lecture about IAS 40 I would like to ask you about the
    Gain on revaluation of PPE $1500
    Shall we close this amount to revaluation reserve account first then the retained earnings at the end of the year on 31.12.2015 through the following entries:

    Dr Gain on revaluation (OCI) $1500
    Cr Revaluation Reserve (SFP) $1500
    2nd J.V
    Dr Revaluation Reserve (SFP) $1500
    Cr Retained earnings (SFP) $1500

    Or we can close it directly to retained earnings account through the following entry:
    Dr Gain on Revaluation (OCI) $1500
    Cr Retained earnings (SFP) $1500
    Could you tell me which one is correct ,please?

    Thank you in advance.

    August 8, 2021 at 10:18 am #630749
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7172
    • ☆☆☆☆☆

    Hi,

    No, the balance will stay in the revaluation reserve following the change in use. Any subsequent changes in value will then go through profit or loss, which then hit the retained earnings figure. the revaluation reserve remains untouched until the asset is eventually sold. It would then be removed and taken through retained earnings in the usual fashion as a reserve transfer.

    Thanks

  • Author
    Posts
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