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Revaluation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Revaluation

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • September 28, 2021 at 8:48 am #636632
    James124
    Member
    • Topics: 158
    • Replies: 136
    • ☆☆☆

    When we are revaluating an asset so first of all we try to get rid of or remove accumulated depreciation of that asset. Why so? We could have directly added revaluation to cost of NCA and accumulated depreciation would have been carried along as we used to do though it would be now greater in amount.

    September 28, 2021 at 3:15 pm #636643
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    When we revalue we start again with the revalued amount replacing the original cost.

    We then start depreciating again based on the revalued amount.

    The existing accumulated depreciation is removed and we need to do this so that the surplus on revaluation is the difference between the revalued amount and the net book value (the original cost less the accumulated depreciation). (And also because that is what the accounting standard says we must do 🙂 )

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