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Hi Crish, I hope you well. I was alittle uncomfortable with the Figures appear in Revaluation Reserve in SFP and Gain on non-current asset revaluations in other comprehensive incomes
Are the figures same in both columns ?
OR
If there was revaluation in a year, Do we put the Overall revalutaion gain in other comprehensive like 10,000 if we take a random figure
And we put the net figure in revaluation reserve ( Net of annual excess depriciation transfer or any revaluation downwards )also, not connected to what i asked above, where we write revaluation downwards in OCI ? would it be under – Loss on non-current asset revaluation column as there was no such thing written in Performa in CH 3 in notes but We did write the impairments under OCI (in bracket) when dealing with revaluation downwards.
I really do hope i make sense about what i am asking,
Again, Thank you very much. It is such a relief that you are here to clear unsettling doubts.
Basically, will the figures in Revaluation Reserve ( SFP ) and Gain on NCA- Revaluations ( OCI ) will be the same OR we put just the gain for the year in OCI ( not reducing excess deprication ).
and in Revaluation Reserve we also take care of this Reserve transfer or reducing it if there was a loss on revaluation ?the second one looks sensible but i am unsure
Hi,
When we revalue an asset during the year, the gain on revaluation appears in OCI. So, let’s say that we had an asset valued at 100 and it was revalued to 250, there would be a gain on 150 that appears through OCI.
This 150 is then shown in the SOCIE as the shareholder’s equity has increased by 150 in the year. So, if we had a revaluation reserve brought forward of 500, then 150 would then be added to the brought forward figure to give 650 as the closing figure (assuming no reserve transfer for the excess depreciation, to keep it simple). We would then show the 650 on the face of the SFP in the equity section.
So, to answer your question the figures in OCI and on the face of the SFP are likely to be different.
Once we have the gain through OCI, we do not make any adjustment to it (ignoring deferred tax for now). The adjustment for the excess depreciation is adjusted for in the SOCIE.
Hope that clears up your query. Let me know if you need anything further.
Thanks
Thank you so much that cleared everying. I just have last question regarding this chapter,
Are the figures shown in revaluation surplus (SFP) are taken from SOCIE ( Excess Dep. adjusted figure) ?
or We keep the Excess depriciation added in Revalutaion reserve (SFP) and adjust it in SOCIE.
Thank you again, my head is preety all clear for PPE. i will get back to you if i will have any more question.
No, the excess depreciation adjustment is only processed through the SOCIE. It does not appear through OCI in the SPLOCI.
Glad you are on to of everything related to PPE.
Thanks
Hii Chris ,
I’ve been solving solving PPE questions from bpp WorkBook in which I’ve come across this particular question:Replacement Value of an asset has been given which is to be treated as the FV at the date of revaluation however, as it is at the end of the year (1.10.X7 – 30.9.X8) in the solution accumulated depreciation has been deducted from the revalued amount to arrive at the Carrying value at that date .
Why is accumulated depreciation being calculated on the revalued amount and further getting deducted to arrive at the Carrying Value at the date of revaluation.?
I think you will be looking at specialised asset, which will have no readily available fair value. To calculate the fair value you need to calculate the depreciated replacement cost. This is the current replacement cost, to which we apply the depreciation based upon its original estimate and the number of years to have elapsed since the date of purchase.
Thanks
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