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Hi John
When an asset is measured using the revaluation model and then eventually when it is disposed of, what’s the double-entry?
Do you debit ‘loss on disposal’ on the Statement of Profit and Loss or do you debit the revaluation reserve first, up to the max extent possible (if there is a revaluation reserve) and then put any surplus loss to the Statement of P and L?
In all instances, do you then credit the non-current asset to derecognise it?
Thank you,
Ali
The double entries for the disposal itself are exactly as always (as I show in my free lectures on this), and of course the cost and accumulated depreciation are transferred to the disposal account as always. The profit or loss on disposal is transferred to the SPOL, again as usual.
There is no longer the need to keep the revaluation reserve separate as a capital reserve – it now becomes distributable and is therefore transferred to retained earnings.
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