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Revaluation continued

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Revaluation continued

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
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    Posts
  • March 14, 2017 at 6:18 pm #378211
    maryam13
    Member
    • Topics: 11
    • Replies: 0
    • ☆

    Thank you for your last response, in relation to the last point did you mean that because there is a loss of 12,000 which is larger than the previous gain of 10,000 nothing goes into equity and the 2,000 loss difference just go through to the comprehensive income (p and l)?

    Also from the F7 Notes Pg. 132

    ‘revaluation reserve transferred to retained earnings when asset sold, or …

    … proportionately transferred to retained earnings throughout the asset’s remaining life’

    Does this mean that whenever there is a revaluation surplus it’s always
    Dr. Reval Surplus
    Cr. Retained Earnings
    eg. Reval surplus 30,000 would be debited to revaluation reserve and credited to retained earnings?

    I previously thought that it’s only if deprecation was to increase then that increment would be equal decrease in the revaluation reserve and increase in the retained earnings in order compensate for shareholders?

    If depreciation decreased would this apply?

    March 14, 2017 at 10:29 pm #378257
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    You really are confused!

    The example that I made up in my previous post related to an asset that had previously been revalued and there was a surplus in the Revaluation Reserve (RR) relating to that asset of $10,000

    Now that same asset has been reassessed and we should reduce its carrying value by $12,000

    The double entry to effect that fall in value will be:

    Dr RR $10,000
    Dr (probably) Cost of Sales $2,000
    Cr TNCA $12,000

    You say in your post:

    “I previously thought that it’s only …..”

    When we have an asset that has previously been revalued upwards and there is an amount within RR relating to that asset, and now we sell the asset, that amount in RR relating to the asset that is now sold represents a REALISED profit and, as such, is transferred to Retained Earnings through the statement of changes in equity

    Is that any better for you?

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  • The topic ‘Revaluation continued’ is closed to new replies.

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