What is the double entry of REVALUATION RESERVE?

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What is the double entry of REVALUATION RESERVE?

Postby befriends » Sat Apr 18, 2009 5:43 pm

Double Entry?
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Re: What is the double entry of REVALUATION RESERVE?

Postby steve collings » Sun Apr 19, 2009 12:55 pm

The debit will be to non current assets in respect of the revalued asset e.g.

Dr non-current assets
CR revaluation reserve.

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Steve
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Re: What is the double entry of REVALUATION RESERVE?

Postby befriends » Sun Apr 19, 2009 2:38 pm

Can you explain a bit more Steve.


Taking chance - 2009 release

http://www.zalaa.com/flash/607/Taking-Chance-2009
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Re: What is the double entry of REVALUATION RESERVE?

Postby steve collings » Sun Apr 19, 2009 2:47 pm

Have you studied IAS 16 and the two methods of recognition (historic cost and revaluation)?

You have two choices of measuring non current assets under IAS 16. Where you apply the revaluation model then you state non-current assets in a particular class at market value at the reporting date.

Example:

31 December 2007 market value = $10,000
31 December 2008 market value = $12,000

You debit non current assets by $2,000 which reflects the uplift and credit revaluation reserve.

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Steve

p.s. could i ask why you are posting links to youtube etc after each reply?
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Re: What is the double entry of REVALUATION RESERVE?

Postby befriends » Sun Apr 19, 2009 2:58 pm

Gift ,guess so. Steve thanks again.

Or actually saying thanks would it enough for you.

Nobody is generous enough in this world to do " Non-Profit " act. It's a lie. Though accoutancystudents.co.uk is the best forum site for accountancy students still it's hard to expect answers quickly right.
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Re: What is the double entry of REVALUATION RESERVE?

Postby befriends » Sun Apr 19, 2009 3:08 pm

Have you studied IAS 16 and the two methods of recognition (historic cost and revaluation)?

You have two choices of measuring non current assets under IAS 16. Where you apply the revaluation model then you state non-current assets in a particular class at market value at the reporting date.

Example:

31 December 2007 market value = $10,000
31 December 2008 market value = $12,000

You debit non current assets by $2,000 which reflects the uplift and credit revaluation reserve.

Regards
Steve

p.s. could i ask why you are posting links to youtube etc after each reply?


Yes, studied IAS 16. Procrastination took 6 days of mine.

So, revision seems far away, needs to clear the concepts.

Assets are measured preferably on historical cost.
Or as prudence states " which ever is lower NRV or Cost or selling price"

We have to revalue asset to show the ( now )actual price we will bear for Non CA , Steve is this statement correct?


In the above statement Asset revalued at 12k - the revaluation amount is debited and that's it.

So, double entry is

Dr. Non-current asset by 12000
Cr. Revaluation 2000

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Re: What is the double entry of REVALUATION RESERVE?

Postby steve collings » Sun Apr 19, 2009 3:17 pm

Not quite because that entry would not work as it does not balance.

In the illustration you would debit non-current assets $2,000 to uplift the asset to its market value (it has been previously stated at $10,000), then credit revaluation reserve by $2,000.

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Steve
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Re: What is the double entry of REVALUATION RESERVE?

Postby befriends » Sun Apr 19, 2009 3:52 pm

ok! right I get it. You actually balance off.

Me BIG fool.

At least should've balanced off.
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Re: What is the double entry of REVALUATION RESERVE?

Postby usof » Sun Aug 22, 2010 5:52 pm

i understood about revaluation reserve but i can not understand when depreciation comes in. i dont know on what basis we credit or debit the accumulated depreciation and revaluation reserve. I mean i know purchase is an expense so we debit and cash is an asset so we credit when ever we purchase. second thing i wanted to ask if there is a fall in value of a non-current asset do we show this in statement of financial position. I am new to this field. So sorry if im asking stupid questions :S lol
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Re: What is the double entry of REVALUATION RESERVE?

Postby c finch » Sun Aug 22, 2010 8:28 pm

Hi there,

With double entry questions you need to be clear what the transaction is.

What is the double entry of the revaluation reserve really is not a complete question..

Steve has done a brilliant job and interpreted it as
'What is the double entry when you revalue an asset'

There are 3 main transactions

1. Initial decision to revalue an asset
2. Subsequent depreciation of a revaued asset
3. disposal of a revalued asset.

It will help your studies if you think transactionally

Hope that helps

Clare
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