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What journal entries are required to record the revaluation of the assets to their fair value?...

What journal entries are required to record the revaluation of the assets to their fair value? under IFRS standards

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Expert Solution

What journal entries are required to record the revaluation of the assets to their fair value? under IFRS standards

IFRS allows the revaluation of the Assets to the major changes in the fair market value above or below the carrying value of the asset. US GAAP doesn't allow the revaluation of assets.

Carrying Value of the asset is the cost, plus, other expenses on the asset that are added to the cost, less, depreciation/ amortization.

Example:

Suppose a Building is purchased at the cost $100,000 with the useful life of 10 years. Annual depreciation is 100,000 / 10 years = $10,000

Building 100,000
Cash 100,000

After, 2 years of usage, Carrying value is 100,000 (10,000 x 2) = 80,000. But the fari market value is $96,000

Building 16,000
Revaluation Surplus 16,000

Depreciation after Revaluation will be 96,000 / Remaining useful life

Depreciation 12,000
Accumulated Depreciation 12,000

ekkarill92 answered 2 years ago
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