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In the 12/09 Candel qs,there is a revaluation reserve in the trial balance and in the notes a downwards valuation has taken place so wont we take the net affect to the SOCI?
In the bpp answer they have straightly taken only the fall in value of the leasehold propertyIf there is a revaluation reserve in the trial balance, that represents the balance on that account brought forward from last year.
This year we have a revaluation downwards, so the amount of this year’s fall will be debited to the revaluation reserve account.
What are you thinking about when you suggest “… the net effect ….”?
By net effect i meant that the amount of revaluation reserve minus the downward revaluation.So in the SOCI we only take the amount of revaluation this yr right
Correct
Yes, that’s what I feared you meant – but do you see that that makes no sense at all?
In the question you are referring to, there is £10,000 in the revaluation reserve in the trial balance. During the year in question, the leasehold property is revalued at £7,000 less than last year, but £2,500 of this has been identified as depreciation. Therefore there is a remaining revaluation loss of £4,500. We are told that the revaluation reserve relates to this property so we can take the £4,500 loss from this, thus leaving £5,500 to show in the revaluation reserve in the consolidated statement of Financial Position. The loss is also shown in the Statement of other Comprehensive Income.
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