Question: Sorry I didn't know where to address this question. In the video, simple example (4), at 11:20, the Balance Sheet as at 30/6/3 records Land at 1 050 000. My question is, why isn't it recorded as 950 000? After it's revalued shouldn't it be recorded as 950 000? Answer: Aaahhh you are right!!!! I got it wrong :( Thanks for spotting this.
Thank you so much Mr. Robert :) I would appreciate it If you can send me a link about any videos related to the depreciation of assets revaluation surplus. Thanks on advance
Under simple example 1, on the balance sheet u list the following entries: profit 500k,, Revaluation surplus 100k,, other comrehensive income at 100k,, then at the bottom u wrote Comprehensive income 600k... How did u come up with the 600k, obviously it was 500k + X ... Is X the revaluation surplus or is it other comrehensive income
Thanks for the video. It's very helpful. In example 4 there is a loss on revaluation of 50k. This 50k reduces the net profit by 50k (from 500k to 450k). Does this mean that loss on revaluation impacts "net income" and not "profit before tax" i.e. there is no tax benefit (disadvantage) from loss (gain) of such revaluations or general asset losses/ gains? Thanks in advance for your guidance
Well revaluations in most tax jurisdictions do not affect tax. As a result, they would affect both net income and net income before tax. My example is simple and excludes tax. However, if you think about how a revaluation affects the difference between carrying amount and tax base of an asset, it is clear that many revaluations would give rise to a deferred tax effect due to the fact that later depreciation and/or gain/loss on disposal will be different for accounting profit from tax profit. So, if some of the revaluation manifests in the same period as a change in depreciation and/or gain/loss on sale, then there will be a tax affect.
Thank you for this video. very helpful. One Q from me please. How do you account for additional Revaluation surplus on item of PPE that was initially revalued at a surplus .i.e. Surplus on Surplus
during revaluation the partners realised that monies were prepaid to suppliers account. do i have to record it in the revaluation account since it is a current asset or do i record it in the balance sheet after the admission of the new partner
+Nickisha Joseph You would correct the records prior to dealing with partner admission. Certainly not a revaluation. Depends on how the funds were recorded when paid - seems like a correction against profit, if originally recorded as an expense.
Because I have made the assumption that each year, before the effect of any revaluations, the normal business profit is 500,000. So, in the second year, we have a normal profit of 500,000 from other stuff, plus the 30,000 Gain on Revaluation, yielding an increase in Retained Earnings over the previous year of 530,000. See slide 5 for assumptions.
Thanks a lot!! Very detail. It applied to all the cases in the book, as per below: When an asset is increased to fair market value, a gain occurs, as follows: • The gain is first recorded to net income, up to the amount of losses that was previously recorded to net income as a result of revaluations on the asset. • Then the remaining gain is recorded to other comprehensive income (OCI). When an asset is written down to fair market value, a loss occurs, as follows: • The loss is first recorded to OCI, up to the amount of gains that was previously recorded to OCI as a result of revaluations on the asset. • Then the remaining loss is recorded to net income.
Dr Rob! Thanks so much for your videos. I'm having trouble with questions of the following scenario: Building revalued upwards, lets say 100k giving rise to deferred taxes. Later, that same building is revalued downwards by 120k again having tax implications. I'm struggling with the journal entries. Are you able to do a video on something similar?
Will the concept of how the recoverable amount of the asset not being higher than the original carrying value had there been no impairment apply in the revaluation model?
Yes. All revalued assets are also subject to impairment tests usually, when they ask you to revalue, they tell you nothing about the recoverable amount, so you usually assume that (due to the PV cash flows component) Recoverable Amount is much higher than Fair Value. I hope this makes sense :)
@@scoff64 I am sorry to bother u Here in Egypt 6 p.m 😊 U can sleep but promise me answer when get up My question What different between Surplus and gain asset I realize the first increase processsinng as surplus Then if happen loss bigger than surplus We decrease surplus Then if evaluation increase we make it gain
@@scoff64 never mind mr robert My question When the surplus asset happened I put it in balance sheet in owener equity Is it also put in oci statement as not realised gain revaluation Or when I admit of surplus and modify the carring amount of asset I put it in ownerequity only as surplus
![ACCA F3 Chapter 8 - [ Easy Way to Understand NCA-Revaluation of Assets ] - (18.40).mp4](http://i.ytimg.com/vi/s9aQLAHNAwI/mqdefault.jpg)
Robert you absolute champion! Thank you for being so clear!
Thank you so much for going over all the different scenarios Rob!
Thank you for the lecture so enlightening i am watching from Zimbabwe
Very helpful! Thanks
THANK you for the video im watching this at South Africa
hahah im from SA and watching this at Hongkong!
i am watching from durban, SA
i send many thanks and blessings.. this is amazing
I'm studying in RMIT for the CPA, the Video is quite helpful, thanks Robert!
Ned J. Banat I’m glad it helped
@@scoff64 Are you going to post new videos soon Robert?
Question: Sorry I didn't know where to address this question. In the video, simple example (4), at 11:20, the Balance Sheet as at 30/6/3 records Land at 1 050 000. My question is, why isn't it recorded as 950 000? After it's revalued shouldn't it be recorded as 950 000?
Answer: Aaahhh you are right!!!! I got it wrong :( Thanks for spotting this.
i thought about it
You are such a life saviour
Absolutely beautiful 🤗
Thank you so much Mr. Robert :) I would appreciate it If you can send me a link about any videos related to the depreciation of assets revaluation surplus. Thanks on advance
Big help, thank you Robert!
Excellent!!!! You make it so easy to understand.
You are welcome !
great content despite 8years ago !
Great comment despite almost a year ago!
Furniture sold will come on which side of revaluation account?
Under simple example 1, on the balance sheet u list the following entries: profit 500k,, Revaluation surplus 100k,, other comrehensive income at 100k,, then at the bottom u wrote Comprehensive income 600k... How did u come up with the 600k, obviously it was 500k + X ... Is X the revaluation surplus or is it other comrehensive income
Thanks for the video. It's very helpful.
In example 4 there is a loss on revaluation of 50k. This 50k reduces the net profit by 50k (from 500k to 450k). Does this mean that loss on revaluation impacts "net income" and not "profit before tax" i.e. there is no tax benefit (disadvantage) from loss (gain) of such revaluations or general asset losses/ gains?
Thanks in advance for your guidance
Well revaluations in most tax jurisdictions do not affect tax. As a result, they would affect both net income and net income before tax. My example is simple and excludes tax. However, if you think about how a revaluation affects the difference between carrying amount and tax base of an asset, it is clear that many revaluations would give rise to a deferred tax effect due to the fact that later depreciation and/or gain/loss on disposal will be different for accounting profit from tax profit. So, if some of the revaluation manifests in the same period as a change in depreciation and/or gain/loss on sale, then there will be a tax affect.
You are welcome :)
Simply understand. Thanks
Thank you for this video. very helpful. One Q from me please. How do you account for additional Revaluation surplus on item of PPE that was initially revalued at a surplus .i.e. Surplus on Surplus
No problem, it just keeps getting added to, so Dr Asset Cr Reval Surplus. Hope that helps :)
Thank you very much Sir. But I have a question Sir at 7:27. Can we debit Loss on Revaluation instead of debiting Revaluation Surplus?
Yes, in fact that is the better way of doing it. So long as the loss is “Loss on Revaluation (OCI)”, not “Loss on Revaluation (P&L)”
@@scoff64 Thank you so much Sir
I’m doing ACCA CAT. And I have my FFA exams 😪 I just hope to atleast be in my 70’s. thanks for this lecture, it was pretty helpful. Wish me luck 😊
Good luck, if not too late :)
Very helpful. Thank you
Will you explain the subsequent adjustmnet of revaluation surplus and tax effect plz.?
very helpful. thanks
during revaluation the partners realised that monies were prepaid to suppliers account.
do i have to record it in the revaluation account since it is a current asset or do i record it in the balance sheet after the admission of the new partner
+Nickisha Joseph You would correct the records prior to dealing with partner admission. Certainly not a revaluation. Depends on how the funds were recorded when paid - seems like a correction against profit, if originally recorded as an expense.
Thank you very very very much sir !
Thanks, great job.I have a quick question: Why at example 5, why the R/E amount on the second year is $980 K, shouldn't be $530 K? Thanks
Because I have made the assumption that each year, before the effect of any revaluations, the normal business profit is 500,000. So, in the second year, we have a normal profit of 500,000 from other stuff, plus the 30,000 Gain on Revaluation, yielding an increase in Retained Earnings over the previous year of 530,000. See slide 5 for assumptions.
Thanks a lot!! Very detail. It applied to all the cases in the book, as per below:
When an asset is increased to fair market value, a gain occurs, as follows:
• The gain is first recorded to net income, up to the amount of losses that was previously recorded to net income as a result of revaluations on the asset.
• Then the remaining gain is recorded to other comprehensive income (OCI).
When an asset is written down to fair market value, a loss occurs, as follows:
• The loss is first recorded to OCI, up to the amount of gains that was previously recorded to OCI as a result of revaluations on the asset.
• Then the remaining loss is recorded to net income.
Correct
Dr Rob! Thanks so much for your videos. I'm having trouble with questions of the following scenario: Building revalued upwards, lets say 100k giving rise to deferred taxes. Later, that same building is revalued downwards by 120k again having tax implications. I'm struggling with the journal entries. Are you able to do a video on something similar?
Hi Mitch, no real time to do a video, but I can whip up a spreadhseet. Give me a few moments
hope this spreadhseet helps: www.dropbox.com/sh/nl0ckaku78zk3vn/AAAvvPN3Qm5GIrsW8hzGQ6Vpa?dl=0
Hi. In the part about "FMV- cost to sell"...
What are "costs to sell"? Is that the same as cost of goods sold?
No, COGS is the book value of inventory given up in a sale of merchandise. costs to sell would be any fees or other direct costs of selling.
Will the concept of how the recoverable amount of the asset not being higher than the original carrying value had there been no impairment apply in the revaluation model?
Yes. All revalued assets are also subject to impairment tests usually, when they ask you to revalue, they tell you nothing about the recoverable amount, so you usually assume that (due to the PV cash flows component) Recoverable Amount is much higher than Fair Value.
I hope this makes sense :)
what is OCI? as it is diff in question.what is it?
thankyou very much 😭
Really Helpful thank!
You're welcome !!
Really. U r brilliant
I wanna want ask u
سامح سيد sure. Ask away (but I’m about to go to sleep)
@@scoff64
I am sorry to bother u
Here in Egypt 6 p.m 😊
U can sleep but promise me answer when get up
My question
What different between
Surplus and gain asset
I realize the first increase processsinng as surplus
Then if happen loss bigger than surplus
We decrease surplus
Then if evaluation increase we make it gain
@@scoff64 goog moring
@@سامحسيد-ص8ج Sorry about the delay in replying. What is your question?
?
@@scoff64 never mind mr robert
My question
When the surplus asset happened I put it in balance sheet in owener equity
Is it also put in oci statement as not realised gain revaluation
Or when I admit of surplus and modify the carring amount of asset I put it in ownerequity only as surplus
I want channel explain ifrs with easy way like you
I am study it with myself
So could you recommend me any channel besides material 2019 2020 handouut
ACCA, CAT?
@@FoxyWoxy. is that channel
@@FoxyWoxy. I have not find any channel about this name
Am at oth minute and i can't understand how u r comingup with the figures
this' perfect 💯
You are very welcome !
Revaluation basics
Which University?
You mean which Uni am I at? I am at UTS (University of Technology Sydney) (yes, there used to be a comma there, once).
400-th like comes from me.