When an item of property, plant and equipment is revalued what should be revalued?

(See ‘Related links’ for the solution to Example 8.) The asset must continue to be depreciated following the revaluation. However, now that the asset has been revalued the depreciable amount has changed. In simple terms the revalued amount should be depreciated over the asset’s remaining useful life.

When an item of property, plant and equipment is revalued what should be revalued?

(See ‘Related links’ for the solution to Example 8.) The asset must continue to be depreciated following the revaluation. However, now that the asset has been revalued the depreciable amount has changed. In simple terms the revalued amount should be depreciated over the asset’s remaining useful life.

How do you account for asset revaluation?

If a revalued asset is subsequently valued down due to impairment, the loss is first written off against any balance available in the revaluation surplus and if the loss exceeds the revaluation surplus balance of the same asset the difference is charged to income statement as impairment loss.

How do you record a fixed asset revaluation?

The company can make the revaluation of fixed assets journal entry by debiting the fixed asset account and crediting the revaluation surplus account. Revaluation surplus account is a reserve account in the equity section in which its normal balance is on the credit side.

How do you record a revaluation?

A revaluation that increases or decreases an asset ‘s value can be accounted for with a journal entry that will debit or credit the asset account. An increase in the asset’s value should not be reported on the income statement; instead an equity account is credited and called a “Revaluation Surplus”.

What does IAS 16 state about how we should depreciate an asset?

For all depreciable assets: The depreciable amount (cost less residual value) should be allocated on a systematic basis over the asset’s useful life [IAS 16.50]. Depreciation should be charged to profit or loss, unless it is included in the carrying amount of another asset [IAS 16.48].

Which of the following is covered by IAS 16 property, plant and equipment?

Property, plant and equipment are tangible items that: are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and. are expected to be used during more than one period.

How do you record property, plant and equipment?

PP&E is recorded on a company’s financial statements, specifically on the balance sheet. To calculate PP&E, add the amount of gross property, plant, and equipment, listed on the balance sheet, to capital expenditures. Next, subtract accumulated depreciation. The result is the overall value of the PP&E.

Can you revalue plant and machinery?

When an item of property, plant and equipment is revalued, the revaluation gain or loss is taken directly to a revaluation reserve within the equity section of the balance sheet and is reported as other comprehensive income.

What is an asset IAS 16?

IAS 16 prescribes that an item of property, plant and equipment should be recognised (capitalised) as an asset if it is probable that the future economic benefits associated with the asset will flow to the entity and the cost of the asset can be measured reliably.

Which of the following is covered by IAS 16 Property plant and equipment?

What is depreciation according to IAS 16?

IAS 16 defines depreciation as ‘the systematic allocation of the depreciable amount of an asset over its useful life’. The ‘depreciable amount’ is the cost of an asset or other amount substituted for cost (for example the fair value of an asset following a revaluation), less its residual value.