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Transfer from IAS 16 to IAS 40

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Transfer from IAS 16 to IAS 40

  • This topic has 5 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • December 24, 2016 at 7:30 pm #364401
    hemraj123
    Member
    • Topics: 110
    • Replies: 188
    • ☆☆☆

    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

    December 24, 2016 at 8:52 pm #364407
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23323
    • ☆☆☆☆☆

    1) Yes

    2) Statement of Profit or Loss

    3) No, depreciation will go through profit or loss and gains won’t be recognised

    December 24, 2016 at 8:56 pm #364409
    hemraj123
    Member
    • Topics: 110
    • Replies: 188
    • ☆☆☆

    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?

    December 24, 2016 at 9:06 pm #364411
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23323
    • ☆☆☆☆☆

    Yes, so depreciate for half a year, then revalue and take surplus to revaluation reserve and then treat as investment property after that

    December 24, 2016 at 9:09 pm #364413
    hemraj123
    Member
    • Topics: 110
    • Replies: 188
    • ☆☆☆

    Thank you very much sir 🙂

    December 24, 2016 at 9:10 pm #364414
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23323
    • ☆☆☆☆☆

    You’re welcome

  • Author
    Posts
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