Assets on revaluation model

BesarB

Hi there.

I am stuck on this bit. We have purchased an asset for £100k on 1-Jan-2014 and have chosen the revaluation model as our accounting policy for depriciation. At the year end 31-Dec-2014 do we revalue the asset? and if the value decreases by 10k, do we record it as debit impairement loss account and credit accumulated loss account. I am a bit confused as to where the depriciation sits in all this as the asset still has to be depreciated. Is it depreciated straight after revaluation for the year end 31-Dec 2014.

Looking forward to an answer.

Kind regards
Besar

JoshJ1992

Hi Besar,
Are you referring to PPE? If so, the accounting treatment for a decrease in the carrying amount according to my notes is:
Debit - revaluation surplus/SPL to recognise the fall in value
Debit - accumulated depreciation to remove all accumulated depreciation
Credit - PPE - asset account (to record the loss in the value of the asset).

Does this sound right to everyone else?
PPE is revalued at regular intervals to keep the valuation up to date so I imagine that it the timescale for this is in the companies policy.

Hope that helps.

BesarB

Thanks for the reply. I think you only debit revaluation surplus when there has been a previous increase in value. If an asset decreases in value without previous increase then you debit the impermanent loss account p/l and credit the accumulated impairement account b/s.