Increase in value of bond - revaluation reserve?

Gem7321

Please can someone clarify this for me.

If £x was invested in a 5 year bond and the bond has not yet matured, and the bond is currently valued at £y, should the difference between £x and £y if material be posted to a revaluation reserve?

At the moment it's sat in interest received :confused1:

jamesm96

Gem7321 wrote: »

Please can someone clarify this for me.

If £x was invested in a 5 year bond and the bond has not yet matured, and the bond is currently valued at £y, should the difference between £x and £y if material be posted to a revaluation reserve?

At the moment it's sat in interest received :confused1:

I can't easily see a reference for it in the FRSSE, but I believe that (unless your client applies full FRS) you would simply record the Bond at cost in the balance sheet as a current / fixed asset investment (depending on how long the Directors intend to hold the bond; as it's more than one year, likely 'fixed').

Any interest received during the period is credited in the P&L accordingly, and you'd only recognise any capital appreciation on maturity (i.e. disposal).

Does that help?

Mike.