- This topic has 29 replies, 4 voices, and was last updated 7 years ago by
.
- Posts
Retained earnings and the revaluation reserve are both monies owed to shareholders.
Transferring from revaluation reserve to retained earnings does not affect the total owed to shareholders, and nor does it affect the total profit.
All it does is make more of the money distributable to shareholders by way of dividend.None of the reserves represent ‘real cash’ – they represent money owed to shareholders. If any is paid out as dividend then cash reduces and so do reserves. However the law only allows the amount in revenue reserves (retained earnings) to be paid as dividend.
Hallo,
ok, it’s getting a bit clearer.
May I ask, is the net effect of the new depr. (i.e. after revaluation) in the SOPOL, where it is an expense and the excess depr. in the Revaluation rezerve or Retained earnings, a 0, one decrases, the other incrases, so profit is not changed?
Thank you!
In the Statement of profit or loss, depreciation is based on the revalued amount.
All the transfer between reserves is doing is changing the amount that is distributable.
Sorry sir but As I know that some people explain there are 10 years between 20X3 and 20W4 becuz of difference between X and W so NBV = 800000 – 800000*2%*10=640000
- The topic ‘revaluation of non-current asset’ is closed to new replies.