Helpppp: IAS 16 in textbook of Financial Statement

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.

Comments

  • RichardRichard Trusted Regular Posts: 373Registered
    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)
  • kinmomokokinmomoko New Member Posts: 9Registered
    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
  • RichardRichard Trusted Regular Posts: 373Registered
    Yes, that looks right to me!
  • kinmomokokinmomoko New Member Posts: 9Registered
    Thank you very much and Happy New Year
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