Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › single company FS prep
- This topic has 3 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
- AuthorPosts
- November 14, 2015 at 1:17 am #282238
the scenario has a leasehold property. it states that in the previous year, there was an impairment charge of 2.8m. in the TB given, there is no previous Revaluation surplus.
i have correctly calculated the gain in the current year which is 1.5m
1. in the answer, the gain is not shown as OCI but as a decrease in the COGS. the effect is the same but why was it treated this way?
2. in the SFP, there is no Reval surplus shown. so i assume that the debit is in the property account itself,
3. that there is no revaluation surplus, is this connected to the impairment charge from last year?
thanks in advance
November 14, 2015 at 5:49 am #282246“1. in the answer, the gain is not shown as OCI but as a decrease in the COGS. the effect is the same but why was it treated this way?” – in the previous year when the asset was impaired, it couldn’t have been set off against a previous revaluation (unless it was and wiped out the previous revaluation) so it must have been expensed through profit or loss and, from your post, through the cost of sales, like an additional depreciation.
So this year, when we reverse that previous impairment, we simply undo the impairment entries and that’s why it’s gone to cost of sales
“in the SFP, there is no Reval surplus shown. so i assume that the debit is in the property account itself,” – are you talking about the revaluation debit of $1.5m? In which case, it won’t have gone anywhere near the revaluation reserve, even if there had been one! The debit is to the asset account and the credit (as explained above) is in cost of sales
“that there is no revaluation surplus, is this connected to the impairment charge from last year?” – already explained, I believe
November 14, 2015 at 8:37 am #282274this may not be the appropriate place but i want u to know that the terror in paris is a source of grief to all people who respect humanity over any religion or politics
November 14, 2015 at 3:22 pm #282341You’re right! F7 Ask the Tutor is a very strange place for your comment. However, I’m glad to hear it and I share your views
- AuthorPosts
- You must be logged in to reply to this topic.