Revaluation decrease example 2Solved

Hiya,

Thanks for the question.

So the $400,000 relates to the impairment charged to profit or loss in the current year, but the $3.85 million relates to the existing revaluation surplus.

- Impairment in profit or loss: $400,000. The asset's carrying amount before impairment is $12.25m, compared with its recoverable amount of $8m. The $4.25m decrease is allocated first against the existing revaluation surplus of $3.85m, with the remaining $0.4m charged to profit or loss.

- Impairment in OCI: $3.85m. This represents the reduction in the revaluation surplus recognised in other comprehensive income. It reverses the surplus previously recognised in respect of the asset.

thanks a lot Sir