Negative Revaluation Reserve on PPE

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Dawny
Dawny Registered Posts: 62 Regular contributor ⭐
in General accounting discussion
I have just taken over the accounts of a small company and there is a negative revaluation reserve from a historical revaluation on the companies tangible fixed assets.

Should I take this to the P&L as impairment in this year's accounts?

Thanks in advance.

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  • Dawny
    Dawny Registered Posts: 62 Regular contributor ⭐
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    Thank you.
  • Gem7321
    Gem7321 Registered Posts: 1,438 Beyond epic contributor 🧙‍♂️
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    Has the loss been realised? (ie. has the asset been disposed of or reached the end of its economic life?)
  • Dawny
    Dawny Registered Posts: 62 Regular contributor ⭐
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    The assets were various pieces of equipment which had no value left. But no other loss had been put through the books.
  • Gem7321
    Gem7321 Registered Posts: 1,438 Beyond epic contributor 🧙‍♂️
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    My understanding is that the revaluation reserve is transferred to the P&L as the loss is realised, so with tangible fixed assets this is normally in line with depreciation or when the asset is disposed of so if the asset is fully depreciated then you should write the reserve off to the P&L accordingly. But I stand to be corrected!
  • Dawny
    Dawny Registered Posts: 62 Regular contributor ⭐
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    Yes, this is my understanding too, but I needed someone to confirm it for me so thank you!

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