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Treatment of Revaluation Surplus

work is worship (Service) (2728 Points)

21 February 2010

Hi.. while revaluing the assets, how do we treat the revaluation surplus...

Please advise.

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4 Replies

First!!!! (student) (162 Points)
Replied 22 February 2010

If there is a revaluation surplus Cr. Baln in ur books of say Rs.1000 and the W.D.V. was Rs.500 and now has decreased to Rs.450 aftter revaluation then entry would be:

Revaluation A/c...Dr 50

To Fixed Asset A/c 50

(Revaln A/c Baln=500-50=450)

If there is a revaluation surplus Cr. Baln in ur books of say Rs.1000 and the W.D.V. was Rs.500 and now has incresed to Rs.600 aftter revaluation then entry would be:

Fixed Asset A/c Dr.... 100

To Revaluation A/c 100

(Revaln A/c Baln =500+100=600)

Regards,

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work is worship (Service) (2728 Points)
Replied 22 February 2010

I dont think so, i think a portion of revaluation surplus each year is transferred to Retained Earning (Revaluation Gains). This is i think as per IAS. i

I am not definite hence asking.

First!!!! (student) (162 Points)
Replied 23 February 2010

Agreed the portion of Revaluation surplus is transferred to retained earnings (which i have already mentioned in the reply, i.e. Revaluation Surplus has already a Credit Balance of Rs.500) in the books but the same cannot be used to declare Dividend ... It would be much more helpful if u could be much more clear and tell me what is wrong in the treatment i have given....

Regards,