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Hi,
I need help in the following matter relating to Chapter 3 Example 1 of F7 Notes (Page 10).In point (iii) it is stated that, “A non-current asset with a carrying value of $130,000 was written down to $95,000. The impairment occurred as a result of general price changes. The revaluation surplus account contains $25,000 relating to this asset.”
The impairment is of $35,000.
In solution to this point, only $25,000 has been taken into account, which has been subtracted from Revaluation Surplus.
Why the other $10,000 is not taken into account as impairment loss and subtracted from retained earnings?
Is this related to the reason in point (iii) that the impairment occurred as a result of general price changes?Thanking in advance.
The question specifically asks only for the Statement of Changes in Equity
Only $25,000 of the $35,000 impairment will be shown in the statement
The other $10,000 is deducted in arriving at the $421,000 profit after taxation
So it has been deducted from statement of profit or loss already
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