Helpppp: IAS 16 in textbook of Financial Statement

kinmomoko

Hi, anyone knows about these (i can't get my head around these ((

in p. 155 of textbook of financial statement

IAS 16 states that a revaluation gain can ONLY be recognised in profit or loss if it reverses a revaluation loss that has previously been recognised in profit or loss

(does it mean the gain of this item before has previously had a loss?? )

and in p. 167

IAS 16 under the fair value model the property (guessed they talking about investment property) is not depreciated; and the gain or loss on revaluation is recognised IN PROFIT OR LOSS not in other comprehensive income.

are they a bit contradict.....oh dear....anyone can help
Many thanks for any advice.

Richard

kinmomoko wrote: »

Hi, anyone knows about these (i can't get my head around these ((

in p. 155 of textbook of financial statement

IAS 16 states that a revaluation gain can ONLY be recognised in profit or loss if it reverses a revaluation loss that has previously been recognised in profit or loss

(does it mean the gain of this item before has previously had a loss?? )

and in p. 167

IAS 16 under the fair value model the property (guessed they talking about investment property) is not depreciated; and the gain or loss on revaluation is recognised IN PROFIT OR LOSS not in other comprehensive income.

are they a bit contradict.....oh dear....anyone can help
Many thanks for any advice.

Any revaluation gains are credited to the revaluation surplus on the balance sheet. If in subsequent years, the revaluation creates a loss, in the first instance this loss is charged to the revaluation surplus, and then the remainder to P&L if the loss is greater than the surplus.

If the revaluation then creates a gain in another year, you can show this in P&L as it is reversing a loss written off in a previous period. (Limited to the amount written off in prior year)

With the fair value model, all gains and losses are reported in the P&L. (IAS 40 deals with Investment properties)

kinmomoko

thank you Richard

For example. if a PPE purchasing cost: 1000
Year 1 revaluation value become 1100
year 2 revaluatiion value become 700
year 3 " " 800
year 4 " " 1100
Am I right to report like the following

Year 1 Gain in Revaluation Reserve of property 100 (under the title of "Other comprehensive income for the year" in Statement of Comprehensive Income)

Year 2 Loss in Profit and Loss bit: 300 in Statement of Comprehensive income to work out "profit from Operation"

Year 3 Gain in Profit and Loss bit: 100 in statment of comprehensive income to work out "profit from operation"

Year 4 Gain in Revaluation Reserve of property 100 (like year one)

Many thanks again

Richard

Yes, that looks right to me!

kinmomoko

Thank you very much and Happy New Year