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Realuation surplus

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › Realuation surplus

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  • December 11, 2014 at 11:01 am #220201
    AvatarGabriel
    Member
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    • ☆

    Please help me understand what effect of policy:

    The company policy states that the revaluation surplus shall only be realised through disposal of the asset.
    what is the effect of the above policy on (1)the calculation of the depreciation. (2) accounting treatment of the revaluation surplus revearsal of impairment.

    December 12, 2014 at 12:26 pm #220333
    AvatarJohn Moffat
    Keymaster
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    Depreciation is calculated on the revalued amount.

    Excess depreciation is not transferred from revaluation reserve to retained earnings.

    When the asset is sold, then the revaluation reserve is transferred to retained earning.

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