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Dear Sir,
I read them in the books and has some problems:
“When PPE (revaluation model) is transferred into Investment property (FV model), it should increase Revaluation surplus if at that day FV exceeding CV.”
My question:Will this RS remain forever? why not we recognize this RS to RE just like derecognizing PPE treatment
“if FV is less than CV, it should be charged to profits.”
My question:why this time it impacts the I/S? why can’t we reduce the RS we previously recognized due to revaluation?
Thanks in advance!!!
The following rules apply for accounting for transfers between categories:
* for a transfer from investment property carried at fair value to owner-occupied property or inventories, the fair value at the change of use is the ‘cost’ of the property under its new classification [IAS 40.60]
* for a transfer from owner-occupied property to investment property carried at fair value, IAS 16 should be applied up to the date of reclassification. Any difference arising between the carrying amount under IAS 16 at that date and the fair value is dealt with as a revaluation under IAS 16 [IAS 40.61]
* for a transfer from inventories to investment property at fair value, any difference between the fair value at the date of transfer and it previous carrying amount should be recognised in profit or loss [IAS 40.63]
* when an entity completes construction/development of an investment property that will be carried at fair value, any difference between the fair value at the date of transfer and the previous carrying amount should be recognised in profit or loss. [IAS 40.65]When an entity uses the cost model for investment property, transfers between categories do not change the carrying amount of the property transferred, and they do not change the cost of the property for measurement or disclosure purposes.
Does that help?
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