‭17‬

‭REVALUATION‬ I‭f‬ ‭an‬ ‭item‬ ‭is‬ ‭revalued,‬ ‭the‬ ‭entire‬ ‭class‬ ‭of‬ ‭assets‬ ‭to‬ ‭which‬ ‭that‬ ‭asset‬
‭belongs‬ ‭should‬ ‭be‬ ‭revalued‬‭.‬ ‭This‬ ‭is‬ ‭to‬ ‭avoid‬ ‭a‬ ‭mixture‬ ‭of‬ ‭costs‬ ‭and‬
‭Initially‬‭,‬ ‭an‬ ‭item‬ ‭of‬ ‭property,‬ ‭plant,‬ ‭and‬ ‭equipment‬ ‭that‬ ‭qualifies‬ ‭for‬ ‭revalued amounts within a class of property, plant and equipment.‬
r‭ ecognition shall be measured‬‭at cost‬‭.‬
‭The following are examples of separate classes:‬
‭ fter‬ ‭recognition‬‭,‬ ‭an‬ ‭entity‬ ‭shall‬ ‭choose‬ ‭either‬ ‭the‬ ‭cost‬ ‭model‬ ‭or‬ ‭the‬
A
‭revaluation‬ ‭model‬ ‭as‬ ‭an‬ ‭accounting‬‭policy‬‭and‬‭shall‬‭apply‬‭that‬‭policy‬‭to‬ a‭ . Land‬ e‭ . Aircraft‬
‭b. Land & buildings‬ ‭f. Motor vehicles‬
‭an‬ ‭entire‬ ‭class‬ ‭of‬ ‭property,‬ ‭plant,‬‭and‬‭equipment.‬‭Under‬‭the‬‭revaluation‬
‭c. Machinery‬ ‭g. Furnitures & fixtures‬
‭model, the PPE shall be measured at its‬‭revalued amount‬‭.‬ ‭d. Ships‬ ‭h. Office Equipment‬
‭ evalued‬ ‭amount‬ ‭=‬ ‭fair‬‭value‬‭at‬‭the‬‭date‬‭of‬‭the‬‭revaluation‬‭less‬
R
‭any‬ ‭subsequent‬ ‭accumulated‬ ‭depreciation‬ ‭and‬ ‭subsequent‬
‭accumulated impairment losses, i.e.‬ ‭BASIS OF REVALUATION‬

F‭ air Value at Date of Revaluation‬ ‭The revalued amount of PPE is based on the following:‬
‭Less: (Subsequent Accumulated Depreciation)‬
‭a.‬ F‭ air‬ ‭Value‬ ‭-‬ ‭determined‬ ‭by‬ ‭appraisal‬ ‭normally‬ ‭undertaken‬ ‭by‬
‭Less: (Subsequent Accumulated Impairment Losses)‬
‭professional qualified valuers.‬
‭Revalued Amount‬
F‭ air‬‭value‬‭is‬‭the‬‭price‬‭that‬‭would‬‭be‬‭received‬‭to‬‭sell‬‭an‬‭asset‬‭in‬‭an‬
‭orderly‬ ‭transaction‬ ‭between‬ ‭market‬ ‭participants‬ ‭at‬ ‭the‬
‭ nder‬‭IFRS,‬‭there‬‭is‬‭no‬‭clear‬‭cut‬‭rule‬‭on‬‭the‬‭frequency‬‭of‬‭revaluation.‬‭The‬
U
‭measurement date.‬
‭frequency‬ ‭of‬ ‭revaluation‬ ‭depends‬ ‭upon‬ ‭the‬ ‭changes‬ ‭in‬ ‭the‬ ‭fair‬‭value‬‭of‬
‭PPE being revalued‬‭, it may be:‬ ‭b.‬ D
‭ epreciated‬ ‭Replacement‬ ‭Cost‬ ‭or‬ ‭Sound‬ ‭Value‬ ‭-‬ ‭this‬ ‭shall‬ ‭be‬
‭used if the market value is not available.‬
‭A.‬ A‭ nnual‬ ‭revaluation‬ ‭(every‬ ‭year)‬ ‭for‬ ‭property,‬ ‭plant‬ ‭and‬
‭equipment‬‭that‬‭experience‬‭significant‬‭and‬‭volatile‬‭changes‬‭in‬‭fair‬ I‭t‬ ‭is‬ ‭the‬ ‭replacement‬ ‭cost‬ ‭or‬‭current‬‭purchase‬‭price‬‭of‬‭the‬‭asset‬
‭value.‬ ‭minus‬‭the corresponding accumulated depreciation.‬
‭B.‬ E‭ very‬‭three‬‭or‬‭five‬‭years‬‭for‬‭property,‬‭plant‬‭and‬‭equipment‬‭with‬ ‭ epreciated‬ ‭Replacement‬ ‭Cost‬ ‭or‬ ‭Sound‬ ‭Value‬ ‭=‬ ‭Replacement‬
D
‭only insignificant changes in fair value.‬ ‭Cost‬ ‭or‬ ‭Current‬ ‭Purchase‬ ‭Price‬ ‭less‬ ‭corresponding‬ ‭Accumulated‬
‭Depreciation‬

‭INTERMEDIATE ACCOUNTING 2 (ACG010)‬

 ‭18‬

‭ACCOUNTING FOR REVALUATION‬ ‭The‬‭decrease of an asset carried at revalued amount‬‭shall be treated as:‬

‭ hen‬ ‭an‬ ‭item‬ ‭of‬ ‭property,‬ ‭plant‬ ‭and‬ ‭equipment‬ ‭is‬ ‭revalued,‬ ‭any‬
W ‭ evaluation Surplus (1)‬
R x‭ xx‬
‭accumulated‬‭depreciation‬‭at‬‭the‬‭date‬‭of‬‭the‬‭revaluation‬‭is‬‭treated‬‭in‬‭one‬ ‭Impairment Loss (2)‬ ‭xxx‬
‭Asset‬ ‭xxx‬
‭of the following ways :‬
(‭ 1)‬ ‭Revaluation‬ ‭Decrease‬‭,‬ ‭to‬ ‭the‬ ‭extent‬ ‭of‬ ‭any‬ ‭credit‬ ‭balance‬
‭a.‬ P‭ roportional‬ ‭Approach‬ ‭—‬ ‭The‬ ‭accumulated‬ ‭depreciation‬ ‭is‬
‭existing in the revaluation surplus pertaining to that asset.‬
‭restated‬ ‭proportionately‬ ‭with‬ ‭the‬ ‭change‬ ‭in‬ ‭the‬ ‭gross‬ ‭carrying‬
‭amount‬‭of‬‭the‬‭asset‬‭so‬‭that‬‭the‬‭carrying‬‭amount‬‭of‬‭the‬‭asset‬‭after‬ ‭(2) Any further decrease is charged to‬‭Impairment‬‭Loss.‬
‭revaluation equals its revalued amount.‬
‭ n‬‭increase‬‭of‬‭an‬‭asset‬‭carried‬‭at‬‭revalued‬‭amount‬‭which‬‭was‬‭previously‬
A
‭b.‬ E‭ limination‬ ‭Approach‬ ‭—‬ ‭The‬ ‭accumulated‬ ‭depreciation‬ ‭is‬ ‭impaired‬‭shall be treated as:‬
‭eliminated‬‭against‬‭the‬‭gross‬‭carrying‬‭amount‬‭of‬‭the‬‭asset‬‭and‬‭the‬
‭net amount restated to the revalued amount of the asset.‬ ‭ sset‬
A x‭ xx‬
‭Gain on Reversal of Impairment (3)‬ ‭xxx‬
‭ hen‬ ‭an‬ ‭asset's‬ ‭carrying‬ ‭amount‬ ‭is‬ ‭increased‬ ‭as‬ ‭a‬ ‭result‬ ‭of‬ ‭the‬
W ‭Revaluation Surplus (4)‬ ‭xxx‬
‭revaluation,‬ ‭the‬ ‭increase‬ ‭shall‬ ‭be‬ ‭credited‬ ‭to‬ ‭Revaluation‬ ‭Surplus‬ ‭as‬ ‭a‬ (‭ 1)‬ ‭Revaluation‬ ‭of‬ ‭Unrecovered‬ ‭Impairment‬ ‭Loss‬ ‭pertaining‬ ‭to‬
‭component of Other Comprehensive Income.‬ ‭that asset.‬
T‭ he‬‭revaluation‬‭surplus‬‭shall‬‭be‬‭transferred‬‭to‬‭retained‬‭earnings‬‭in‬‭one‬‭of‬ ‭(2) Any further increase is credited to‬‭Revelation‬‭Surplus.‬
‭the following ways:‬

‭If Sold‬ ‭If NOT Sold‬

‭ sset is‬
A T‭ he balance of‬ ‭ evaluation surplus‬
R
‭Depreciable‬ ‭revaluation surplus‬ ‭divided by remaining life‬

‭ sset is‬
A T‭ he balance of‬ ‭NONE‬
‭Non-Depreciable‬ ‭revaluation surplus‬

‭INTERMEDIATE ACCOUNTING 2 (ACG010)‬