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    Date Cost Model Revaluation Model Fair Value Model

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    Hace Adis
    The document compares three models for accounting for property, plant, and equipment (PPE): the cost model, revaluation model, and fair value model. Under the cost model, the net book value is original cost minus accumulated depreciation and accumulated impairment losses. Under the revaluation model, the net book value can be adjusted upwards through a revaluation surplus and is equal to fair value minus accumulated depreciation and accumulated impairment losses. The fair value model records PPE at fair value with changes in fair value recorded through profit or loss.

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    Date Cost Model Revaluation Model Fair Value Model

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    Hace Adis
    9 views4 pages
    The document compares three models for accounting for property, plant, and equipment (PPE): the cost model, revaluation model, and fair value model. Under the cost model, the net book value is original cost minus accumulated depreciation and accumulated impairment losses. Under the revaluation model, the net book value can be adjusted upwards through a revaluation surplus and is equal to fair value minus accumulated depreciation and accumulated impairment losses. The fair value model records PPE at fair value with changes in fair value recorded through profit or loss.

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    The document compares three models for accounting for property, plant, and equipment (PPE): the cost model, revaluation model, and fair value model. Under the cost model, the net book value is original cost minus accumulated depreciation and accumulated impairment losses. Under the revaluation model, the net book value can be adjusted upwards through a revaluation surplus and is equal to fair value minus accumulated depreciation and accumulated impairment losses. The fair value model records PPE at fair value with changes in fair value recorded through profit or loss.

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    9 views4 pages

    Date Cost Model Revaluation Model Fair Value Model

    Uploaded by

    Hace Adis
    The document compares three models for accounting for property, plant, and equipment (PPE): the cost model, revaluation model, and fair value model. Under the cost model, the net book value is original cost minus accumulated depreciation and accumulated impairment losses. Under the revaluation model, the net book value can be adjusted upwards through a revaluation surplus and is equal to fair value minus accumulated depreciation and accumulated impairment losses. The fair value model records PPE at fair value with changes in fair value recorded through profit or loss.

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    of 4

    Cost Model Revaluation Model Fair Value Model

    Building: PPE 1,000 Building: PPE 1,000 Building: PPE 1,000


    ry 1 Cash 1,000 Cash Cash 1,000
    1,000
    mber 31 Dep Exp 100 Dep Exp 100 No Entry
    Acc Depr 100 Acc Dep 100 BV=FV
    BV=OC-AD-AIL BV=FV-AD-AIL =1,000
    =1,000-100-0 =1,000-100-0
    =900 =900

    Dep. Exp 100 Dep. Exp 100 BV=1,000


    Revaluation
    Surplus=1,200-
    800=400
    Hierarchy for
    Allocation DR
    1. AIL=0
    2. Acc.
    Dep=200
    3. Asset=200
    Acc. Dep 200
    Building 200
    Reva. Sur 400
    BV=FV-AD-AIL
    =1,200-0-0
    =1,200

    Dep. Exp 100 Dep. Exp. 150 No Entry


    Acc. Depr 100 (1200/8) BV=1,200
    BV=1,000-300-0 Acc. Dep 150
    =700 BV=1,200-150-0
    =1,050
    =700 BV=1,200-150-0
    =1,050

    Dep. Exp 100 Dep. Exp 150 FV Loss 900


    31 Acc. Dep 100 Acc. Dep 150 Building 900
    BV=1,000-400-0 BV=1,200-300-0
    =600 =900
    FV=300 FV=300
    If CA>RA=IL Allocation:
    600>300=300 400
    Impairment Loss 300 1. Remaining
    Acc. Imp. Loss 300 Revaluation
    BV=1,000-400- Sur=300
    300 2. Imp=300
    =300 Reval. Reserve 300
    Impair loss 300
    Acc. Imp Loss 300
    Building 300
    BV=900-300-
    300
    =300

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