Hi IFRS Gurus
I got question in line with IFRS 5. As i understood, Before transferring the PPE to current asset and ready for sales, we need to determine the fair value first.
When determining the FV. The FV is the lower of CA and FV minus cost-of-sales.
Step 1.......
Let's say, it is determined that the FV of the PPE actually increases by 200 from 1200 to 1400.
Dr PPE 200
Cr revaluation reserve 200
Step 2.......
Move the new FV to current AHFS (asset held for sales).
DR AHFS 1400
Cr PPE 1600
DR acc. Dep 200
Step 3.......
Lets say, the AHFS is then sold for 1500
Dr cash 1500
Cr AHFS 1400
Cr Profit of sales of AHFS 100
Question: what do we do with the 200 of revaluation reserve sitting in the OCI from step 1? Would that stay there forever in OCI despite the AHFS is sold, or should that go to P&L, by
DR revaluation reserve 200
Cr revaluation gain 200
IFRS 5 question
Re: IFRS 5 question
if the fv-cost of sales is lower, you impair the asset otherwise, there is nothing to do. Except if the assets are at fv. in that case, it's in IAS16
Re: IFRS 5 question
Hey sowrudy, all student's questions belong to the General accounting and financial reporting discussion (even if they can be linked to a specific IFRS). Please post them there, thanks!
Re: IFRS 5 question
Hi Leo, thanks for the answer. Just to clarify a bit. on your reply below. What if from the step 1, the asset is on revaluation method and the value increase and hence increase goes to reserve (oci). What do we do with the reserve (oci) once the AHFS is sold, do we clear it to P&L, if so, what account do we usually clear it to?