In the written down method of calculation in inventory chapter ,we have studied that if the revaluation amount goes above the asset value then the maximum that can be taken is the asset value that is even if the amount is more than the asset value we cannot go beyond as it values price . Example- if the asset value is hundred and the price goes down by 50 and if the revaluation again happens in the next quarter and price goes to 120 after revaluation ,then, the maximum price that can be taken is hundred and not 120 because the initial price was 100.But here in the example where the revaluation value goes above the set value the above higher value is considered. Why?
IFRS for inventory is different from IFRS for PPE in PPE if you are using fair value model you have to charge revaluation surplus if there is revaluation over the Carrying value amount
Remember gains do not flow through the income statement they go straight to equity and are recorded under revaluation surpluses….Whereas loses that take us below the original cost are shown in income statement as loss
At time stamp 5.45, where the value of the asset went down to 8K from 10 k in period 1 and again to 12k in period 2, the loss in period 1 is reversed in period 2. How are we going to treat the loss in equity through retained earnings in period 1? Please help me understand!!
The 2m loss on period 1 appears in the income statement as impairment loss. Consequently, that should decrease equity. The total gain in period 2 is subdivided as follows: 2m gain of reversal of impairment presented in income statement, 2m revaluation surplus straight to equity (OCI)
Sir, at time stamp 6:01 in scenario 2 the value of the asset from 10 k went down to 8k in 1st year and then went up to12k in 2nd year, how can we revalue more than 10k? As explained, In IFRS we can only revalue back up to the original amount? which is 10k, pls help to understand.
when the carrying amount of the asset class increases to 12K, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset class previously recognised in profit or loss, i.e. by 2k. Any increase in excess of the reversal amount will not be recognised in the income statement but will be recorded directly to equity in a revaluation surplus account. IFT Support Team
Revaluation regards the value of the asset that considers the economic context, the impairment on IFRS only is a mandatory plan to mitigate the risk of default.
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god bless this man
In the written down method of calculation in inventory chapter ,we have studied that if the revaluation amount goes above the asset value then the maximum that can be taken is the asset value that is even if the amount is more than the asset value we cannot go beyond as it values price . Example- if the asset value is hundred and the price goes down by 50 and if the revaluation again happens in the next quarter and price goes to 120 after revaluation ,then, the maximum price that can be taken is hundred and not 120 because the initial price was 100.But here in the example where the revaluation value goes above the set value the above higher value is considered. Why?
IFRS for inventory is different from IFRS for PPE in PPE if you are using fair value model you have to charge revaluation surplus if there is revaluation over the Carrying value amount
Thanks that helps a lot 👍🏻
Sir in the example 2 at the end of year 2 the asset in the balance sheet will be shown at which amount
Remember gains do not flow through the income statement they go straight to equity and are recorded under revaluation surpluses….Whereas loses that take us below the original cost are shown in income statement as loss
what are the other sources we could practice questions from ..?? kindly reply....
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IFT Support Team
At time stamp 5.45, where the value of the asset went down to 8K from 10 k in period 1 and again to 12k in period 2, the loss in period 1 is reversed in period 2. How are we going to treat the loss in equity through retained earnings in period 1? Please help me understand!!
The 2m loss on period 1 appears in the income statement as impairment loss. Consequently, that should decrease equity.
The total gain in period 2 is subdivided as follows:
2m gain of reversal of impairment presented in income statement,
2m revaluation surplus straight to equity (OCI)
Retained earnings are part of shareholders equity. So, any decrease in retained earnings lead to decrease in owner’s equity.
IFT Support Team
Sir, at time stamp 6:01 in scenario 2 the value of the asset from 10 k went down to 8k in 1st year and then went up to12k in 2nd year, how can we revalue more than 10k? As explained, In IFRS we can only revalue back up to the original amount? which is 10k, pls help to understand.
when the carrying amount of the asset class increases to 12K, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset class previously recognised in profit or loss, i.e. by 2k. Any increase in excess of the reversal amount will not be recognised in the income statement but will be recorded directly to equity in a revaluation surplus account.
IFT Support Team
@@IFT-CFA Thanks a lot for the explanation.
sir does all the videos here present syllabus for 2020 exam
Yes
IFT where can I get 2020 ift mcqs
Carrying value ~1000
Assets future undiscounted cf- 1050
No imparement
Assets f u cf - 950
Impaired value -50
thank u
Sir difference between revaluation and impairment of assets
Revaluation regards the value of the asset that considers the economic context, the impairment on IFRS only is a mandatory plan to mitigate the risk of default.
You didnt say "... that is all"
otherwise thanks
Thanks
IFT support team
Hi on 3:50 is OCI?