Question

AASB 116 requires that ‘revaluations shall be made with sufficient regularity to ensure that the carrying...

AASB 116 requires that ‘revaluations shall be made with sufficient regularity to ensure that the carrying amount does not significantly differ from that which would be determined using fair value at the end of the reporting period.’

Required:

Do you think there are some implications for the upward revaluations of property plant and equipment on companies’ profit? Justify your answer.

Homework Answers

Answer #1

The asset is to be revalued to fair value

An upward revaluation recognised in OCL (other current liablities) as

Date particulars l/f debit credit
Asset a/c $100000
To Reval surplus $100000

A downward revaluation recognised in P/l (profit and loss) as

Date particular l/f debit credit
Reval loss a/c $100000
To Asset $100000

If reversing the previous revaluation

. An upward revaluation through P/l

. A downward revaluation through OCL

Example

Land at $100000

T1 Revaluation to $120000

T2 revaluation to $90000

Date particulars l/f debit credit
PPE a/c $20000
To Reval surplus $20000

Reval surplus a/c

$20000
Loss a/c $10000
To PPE a/c $30000
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