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mgt401 gdb qution plz discuss here
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11-15-2012, 04:02 PM
Post: #4
**Aamira Queen** Offline [ Member From :Jun 2012]
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RE: mgt401 gdb qution plz discuss here
IAS 16 “Property Plant and Equipment” Any impairment in the value of Property, plant and equipment (IAS 36 “Impairment of Assets” ) is also charged to Income.

A revaluation loss is charged to profit and loss account in the period in which the revaluation is carried out.

However a revaluation decrease should be charged directly against any related revaluation surplus to the extent that the decrease does not exceed the amount held in surplus in respect of the same asset.

In other words decrease should be recognised as an expense, except where it offsets a previous increase taken as a revaluation surplus in owners’ equity. Any decrease greater than the previous upwards increase in value must be taken as an expense in the income statement

Impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.

Recognition of Fixed Assets The benchmark treatment of IAS 16 is to carry property plant and equipment at Cost less Accumulated Depreciation and any Accumulated Impairment Losses.

In this case fall in the value of an asset, so that its recoverable amount is now 3 million less than its carrying value 10 million in the balance sheet.

Who Can Conduct Revaluation?

International Accounting Standard IAS 16 requires that revaluation should be carried out by professionally qualified valuers.

Why it is necessary to report.

The objective of IAS 16 is to prescribe the accounting treatment for property, plant, and equipment. The principal issues are the recognition of assets, the determination of their carrying amounts, and the depreciation charges and impairment losses to be recognized in relation to them. In other words decrease should be recognized as an expense, except where it offsets a previous increase taken as a revaluation surplus in owners’ equity. Any decrease greater than the previous upwards increase in value must be taken as an expense in the income statement.
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RE: mgt401 gdb qution plz discuss here - **Aamira Queen** - 11-15-2012 04:02 PM

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