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- September 27, 2021 at 12:04 pm #636591
Hi Chris,
I just finished watching your lecture on revaluation decrease as part of Chapter 5.
2 questions please:
1) based on the example, If the b/f reservation reserve at 31 Dec 2015 was at $0, does this mean all of the $4,250 revaluation loss would be reported as an impairment expense in the Profit or Loss statement?
2) following the same example, if we were required to show the financial statements as of 31 Dec 2016, since there is now an adjusted depreciation expense for the year (of $8,000 / 7 years remaining asset life), is there any transfer of excess (in this case a “loss”) depreciation from Revaluation reserve to Retained earnings? (I assume this should be a No because essentially this would result in less retained earnings and therefore an ‘unfair’ dividend payout to shareholders?)
Much appreciated in advance!
Regards,
TimSeptember 29, 2021 at 8:55 pm #636709Hi Tim,
1) Correct, yes if there is no surplus from previous revaluations upwards then the loss goes through profit or loss as normal.
2) Yes, the transfer is only done with a revaluation upwards and so when things go the other way there is no adjustment to make.
Thanks
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