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ACCA FR：重估资产考试重点例题

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发布时间：2021-09-23 11:39

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Reserves transfer

The depreciation charge on the revalued asset will be different to the depreciation that would have been charged based on the historical cost of the asset.As a result of this,IAS 16 permits a transfer to be made of an amount equal to the excess depreciation from the revaluation surplus to retained earnings.

Journal entry:

Dr Revaluation surplus

Cr Retained earnings

Be careful,in the exam a reserves transfer is only required if the examiner indicates that it is company policy to make a transfer to retained earnings in respect of excess depreciation on revalued assets.If this is not the case,then a reserves transfer is not necessary.

This movement in reserves should also be disclosed in the statement of changes in equity,as should any revaluation gains and losses which impact the revaluation surplus.

EXAMPLE

A company revalued its property on 1 April 20X1 to$20m($8m of which related to land).The property originally cost$10m($2m of which related to land)10 years ago.The original useful life of 40 years for the buildings is unchanged.The company’s policy is to make a transfer to retained earnings in respect of excess depreciation.

Required

(a)Prepare any necessary journal entries to account for this property during the year ended 31 March 20X2.

(b)Prepare extracts from the following financial statements for the year ended 31 March 20X2:

Statement of profit or loss and other comprehensive income

Statement of financial position

Statement of changes in equity

(See'Related links'for the solution to Example 9.)

Exam focus

In the exam you must make sure that you pay attention to the date that the revaluation takes place.If the revaluation takes place at the start of the year,then the revaluation should be accounted for immediately and depreciation should be charged in accordance with the rule above.

However,if the revaluation takes place at the year-end,then the asset would first be depreciated for a full 12 months based on the original depreciation of that asset.This will enable the carrying amount of the asset to be known at the revaluation date,at which point the revaluation can be accounted for.

A further situation may arise if the examiner states that the revaluation takes place mid-way through the year.If this were to happen the carrying amount would need to be found at the date of revaluation,and therefore the asset would be depreciated based on the original depreciation for the period up until revaluation.Once the asset has been revalued,the remaining depreciation for the year will be based on the revalued amount.This will be the most complicated situation and you must ensure that your workings are clearly structured to show the different amounts of depreciation charged across the year.

EXAMPLE 【点击免费下载>>>更多ACCA学习相关资料】

A company purchased a building on 1 April 20X1 for$100,000 at which point it was considered to have a useful life of 40 years.At the year-end of 31 March 20X6,the company revalued the building to its fair value of$98,000.The company’s policy is to make a transfer to retained earnings in respect of excess depreciation.

Required

(a)Prepare any necessary journal entries to account for this building during the year ended 31 March 20X6.

(b)Prepare extracts from the following financial statements for the year ended 31 March 20X6:

Statement of profit or loss and other comprehensive income

Statement of financial position

Statement of changes in equity

EXAMPLE

At 1 April 20X1,HD Co carried its office building in its financial statements at its original cost of$2 million less accumulated depreciation of$400,000(based on its original life of 50 years).HD Co revalued the office building on 1 October 20X1 to its fair value of$2.2m.The remaining useful life was reassessed at the time of valuation and is considered to be 40 years at this date.The company’s policy is to make a transfer to retained earnings in respect of excess depreciation.

Required

(a)Prepare any necessary journal entries to account for this building during the year ended 31 March 20X2.

(b)Prepare extracts from the following financial statements for the year ended 31 March 20X2:

Statement of profit or loss and other comprehensive income

Statement of financial position

Statement of changes in equity