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Hi, I have a problem with this
The building was revalued on 31 December 20X1 to its fair value of CU 100 000 and as a result of the revaluation, the revaluation surplus was recognized.
On 1 July 20X2, you transferred the building from owner-occupied property to the investment property. The information is as follows:Fair value at the date of transfer: CU 90 000
Revaluation surplus at the date of transfer: CU 15 000
Carrying amount at the date of transfer: CU 98 000 (we assume depreciation for 6 months was recognized).Record this transfer?
My answer:
Debit Revaluation Surplus: 8000
Debit Investment Property: 90000
Credit Building: 98000Did I do right? And I do not know what to do with the Revaluation Surplus at the date of transfer: CU 15 000 ?
Please help me, thank you!Hi,
On transfer to IP from PPE then we follow the rules of IAS 16 first before the transfer is made, so this involves revaluing to fair value and gains through OCI. If we have a loss then we would use the revaluation reserve first, with any excess reduction in value going through profit or loss.
Given the rules above then your answer is correct and don’t worry about the remaining revaluation surplus, as this is left there until the asset is sold.
Top work!
Thanks
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