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    PPE Flow Chart

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    Lek Zheng Rong
    This document provides guidance on accounting for property, plant, and equipment under the revaluation model. It outlines how accumulated depreciation should be treated on the gross basis versus net basis approaches. Under the gross basis, accumulated depreciation is adjusted proportionately with changes in the gross carrying amount. Under the net basis, accumulated depreciation is eliminated against the gross carrying amount and the net amount is restated to the revalued amount, with adjustments to accumulated depreciation forming part of the overall carrying amount change. Examples are provided to illustrate the accounting entries under each approach.

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    PPE Flow Chart

    Uploaded by

    Lek Zheng Rong
    10 views1 page
    This document provides guidance on accounting for property, plant, and equipment under the revaluation model. It outlines how accumulated depreciation should be treated on the gross basis versus net basis approaches. Under the gross basis, accumulated depreciation is adjusted proportionately with changes in the gross carrying amount. Under the net basis, accumulated depreciation is eliminated against the gross carrying amount and the net amount is restated to the revalued amount, with adjustments to accumulated depreciation forming part of the overall carrying amount change. Examples are provided to illustrate the accounting entries under each approach.

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    This document provides guidance on accounting for property, plant, and equipment under the revaluation model. It outlines how accumulated depreciation should be treated on the gross basis versus net basis approaches. Under the gross basis, accumulated depreciation is adjusted proportionately with changes in the gross carrying amount. Under the net basis, accumulated depreciation is eliminated against the gross carrying amount and the net amount is restated to the revalued amount, with adjustments to accumulated depreciation forming part of the overall carrying amount change. Examples are provided to illustrate the accounting entries under each approach.

    Copyright:

    © All Rights Reserved
    Flag for inappropriate content
    10 views1 page

    PPE Flow Chart

    Uploaded by

    Lek Zheng Rong
    This document provides guidance on accounting for property, plant, and equipment under the revaluation model. It outlines how accumulated depreciation should be treated on the gross basis versus net basis approaches. Under the gross basis, accumulated depreciation is adjusted proportionately with changes in the gross carrying amount. Under the net basis, accumulated depreciation is eliminated against the gross carrying amount and the net amount is restated to the revalued amount, with adjustments to accumulated depreciation forming part of the overall carrying amount change. Examples are provided to illustrate the accounting entries under each approach.

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    FRS 16-PPE

    Cost Revaluation Model

    Do not revalue

    Gross basis (a) Net Basis (b)

    A.D restated proportionately with the change in the gross carrying amount of the A.D eliminated against the gross carrying amount of the asset and the net amount
    asset so that the carrying amount of the asset after revaluation equals its revalued restated to the revalued amount of the asset. The amount of the adjustment arising
    amount on the restatement or elimination of accumulated depreciation forms part of the
    increase or decrease in carrying amount that is accounted for in accordance with
    paragraphs 39 and 40.

    Buy PPE for 1000, depreciate over 10 years. At the end of Buy PPE for 1000, depreciate over 10 years. At the end of
    year 2, revalued to 900 year 2, revalued to 900

    Old net carrying amount: 800


    Since 80% of the asset depreciated, the newly revalued asset is still 20% Adjusting entry for end of year 2:
    depreciated. Dr A.D 100
    80% of asset = 900 Cr RR 100
    100% of asset = 1125

    If asset was 1125 and current value is 900, means AD is 225. If end of year 3 , revalued to 400

    Since 200 of AD has already been recorded, Net carrying amount end of year 3= 771.428

    Adjusting entry for end of year 2: Dr Impairment loss (P/L) 271.428


    Dr PPE 100 Dr R.R 100
    Cr A.D 25 Cr A.D 371.428
    Cr RR 75

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