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Hello Chris, in the lectures you said that revaluations shouldn’t be pro-rated, which makes sense since it happens at year end. But in the BPP workbook I’ve seen 2 examples and in both cases they pro-rated revaluation in other comprehensive income. So… what should I do in the exam?
Hi,
I suppose it all depends on the scenario in the question but the vast majority of the time then it won’t be pro-rated. What was the scenario in the workbook? When was the acquisition? When was the revaluation? Did the question give any specifics about gains/losses during the year? I.e. saying that they accrue evenly during the year?
In most circumstances, the gain is likely to arise at the end of the reporting period. Gains on revaluation arise at a point in time and so the full amount of the gain should be taken through OCI regardless of when the acquisition took place in the year.
Thanks
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