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PPE

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › PPE

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • July 17, 2016 at 5:26 pm #326170
    Saimon
    Participant
    • Topics: 123
    • Replies: 55
    • ☆☆

    Sir Can you explain the following point from lecture note,chapter 23

    1) Accumulated depreciation at the revaluation date should either be restated proportionately,for example if indexing is used, or….
    …eliminated in accounting for revaluation

    (can u give me an example of it with explaination)

    2) Can u explain the double entry on revaluation
    and what would be the value of ppe in the double entry ( Fair value,Carrying value or Initial cost)

    (sir if u give an example for the double entry then i can understand it more easily)

    3)under fair value
    “if no recognised market, value at depreciated replacement cost”
    can u explain this line for me

    July 17, 2016 at 9:27 pm #326226
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    “1) Accumulated depreciation at the revaluation date should either be restated proportionately,for example if indexing is used, or….
    …eliminated in accounting for revaluation”

    We can either:

    Dr Accumulated depreciation and credit revaluation reserve, or

    Dr TNCA and credit accumulated depreciation (so that the net increase is reflected by the combination of those two entries) and credit revaluation reserve

    “2) Can u explain the double entry on revaluation
    and what would be the value of ppe in the double entry ( Fair value,Carrying value or Initial cost)”

    This is substantially answered in my answer to your point 1)

    FV? CV? or IC?

    The NET figure for PPE will be the revalued amount and that presumably is FV. That’s also the figure that is the carrying value as at the date of revaluation

    “3)under fair value
    “if no recognised market, value at depreciated replacement cost””

    If there is no active market for used assets of that description, then find the cost of a new asset and calculate depreciation based on that cost for the number of years that the existing asset has been used already

    That gives you depreciated replacement cost

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