Hi.. while revaluing the assets, how do we treat the revaluation surplus...
Please advise.
work is worship (Service) (2728 Points)
21 February 2010Hi.. while revaluing the assets, how do we treat the revaluation surplus...
Please advise.
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,
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,
Sundar Kumar
(NA)
(35 Points)
Replied 16 June 2010
The revaluation surplus is usually transfered to the retained earnings or to Reserves & surplus in the case of companies ie., the entry would be
Revaluation Surplus/profit A/c Dr.
Reserves and Surplus Cr.
In the case of partnership firms, the revaluation surplus is transfered to the partners' capital account.
Revaluation surplus/profit A/c Dr
Partners Capital Cr.