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Sir i do not understand how the following sentence seem to allude that, we need to transfer excess depreciation from revaluation reserve(capital reserve) to retained earnings?
“The entity’s policy is to make an annual transfer of realised amounts to retained earnings.”
how is excess depreciation a realised amount?
Many thanks in advance!
Hi,
It is a bit unclear and there are better narrative ways to explain that the policy is to transfer the excess depreciation to retained earnings. I think the best way to think about it is that we are one year closer to the valuation potentially being realised and are therefore able to do the transfer.
Thanks
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