Premier, December 2010

This topic has 1 reply, 2 voices, and was last updated 13 years ago by MikeLittle.

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July 24, 2012 at 3:51 pm #53849
perist1984
Participant
- Topics: 14
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There is fair value adjustmen of PPE in the amount of 1,2 m $ (less than the carrying amount). Why is there no effect of this FVA in the Statement of comprehensive income? (ie wouldn’t it be correct to increase cost of sales by 1,2 m $)
July 24, 2012 at 5:59 pm #102115
MikeLittle
Keymaster
- Topics: 27
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no, the adjustment is to debit Income Statement ( Comprehensive Income ) and credit the asset.
The Income Statement is also affected each subsequent year because the depreciation charge ( for consolidation purposes ) will be based on the reduced fair value
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