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Sir,
For office adjustment,
Can we charge excess depreciation of (3-2.6) =.4 to revaluation reserve 32.6 and can I write entry as,
Dr. PPE. 32.4
Cr.profit/loss 12.2
Cr.oci. 20.2Hi,
Excess depreciation and reserve transfers arise on the revaluation upwards of an item of PPE.
You need to be careful in this instance as initially we do not have a revaluation upwards but a revaluation downwards. This will therefore not give any excess depreciation. We used to charge $3 million and now charge less as $2.58 million. In this instance we just treat the depreciation in the usual manner with no reserve transfer.
Thanks
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