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Dear sir,
Suppose if the asset was treated as PPE up to 30/6 and then changed to investment property using fair value method. Year end is 31/12 and the asset is revalued on 31/12, then:-
1) Will the depreciation be only for 6 months to the period of change?
2) Will the difference between carrying value and the fair value be transferred to the revaluation surplus or statement of profit and loss account?
3) If cost model was to be used then will the gain or loss be transferred to revaluation surplus?Thanks
1) Yes
2) Statement of Profit or Loss
3) No, depreciation will go through profit or loss and gains won’t be recognised
But sir, for question 2, for half year the asset was treated under IAS 16. Assuming if the fair value of the asset would be given on 30/6 instead of 31/12, will the increase in value now go to revaluation surplus?
Yes, so depreciate for half a year, then revalue and take surplus to revaluation reserve and then treat as investment property after that
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