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TitleReviewer in PPE
TagsDepreciation Expense Book Value Bonds (Finance) Fair Value
File Size443.6 KB
Total Pages16
Document Text Contents
Page 16

out to be higher than the asset’s current carrying amount,
the carrying amount is increased to its new recoverable
amount

Rules:
The increase in carrying amount shall not exceed the
carrying amount that would have been determined had no
impairment loss been recognized in prior years

Reversal of impairment loss shall be recognized
immediately as an income in P&L

Any impairment loss recognized for goodwill shall not be
reversed in subsequent periods.

Entries:
Acc. Depreciation xxx
Gain on reversal of impairment xxx

revaluation, decrease is an expense

Rules:
Revaluation decrease should be applied first against any
revaluation surplus then the excess to
revaluation/impairment loss

Entries:
Acc. Depreciation xxx
Revaluation Surplus (if any) xxx
Revaluation Loss xxx
Machinery xxx

Reversal of Revaluation Decrease
If asset’s carrying amount is increased as a result of
revaluation, increase is a revaluation surplus

Rule:
Revaluation increase should be recognized first as
revaluation gain(P&L) to the extent of previously
recognized revaluation loss then the excess to revaluation
surplus

PPE xxx
Acc. Depreciation xxx
Revaluation Gain xxx
Revaluation Surplus xxx

Impairment Loss

Impairment loss is part of income statement as an expense

Revaluation Surplus

Revaluation surplus is part of other comprehensive income

Realization in whole → when asset is derecognized
(retirement or disposal)

Realization in part → in proportion with depreciation
(revaluation surplus/remaining life of asset)

Realization of revaluation surplus transfers it to retained
earnings

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