Suppose i have a PPE and after some period of time i had to revalue it *downward* leading to an impairment loss.
After debiting the impairment loss to P/L and charging depreciation on the revalued amount, after 2 yrs due to increase in fair value, i had to do upward revaluation which was exceeding the value earlier debited to P/L.
My question is...during the upward revaluation, do i need to reverse the entire amount earlier debited to P/L as per Ind AS 16
OR
Do i need to do the calculation as per Ind AS 36 wherein i have to calculate carrying amount if no impairment had taken place and reverse the difference between such value calculated AND current carrying amount.?
Revaluation calculation will be the same. But the loss will be set off against gains in the subsequent years.
Year 0= purchased PPE
Year 1= Revaluation loss 100
This will be carried to the expenses of SPLOCI -PL directly. If it is gain, it should be taken to SOCIE through OCI
Year 3= Revaluation gain 200
Therefore, 200-100= 100. This gain will be taken to the SPLOCI-OCI as 200, the actual difference in gain of 100 is credited to SPLOCI-PL. This 100 is reversed.
** NBV values after depreciation.
If there is a revaluation gain of 500 in first year, it will be taken to OCI. When there is 1500 subsequent loss, the 500 gain will be debited in OCI, and the rest of 1000 will be debited to SPLOCI-PL.
Impairment will reduce the carrying value of the asset. That loss is written off. The revaluation treatment has little to do with depreciation and impairment. It just revalues an asset at their NBV and Fair values on given dates.
CAclubindia
