أنشئ حسابًا أو سجّل الدخول للانضمام إلى مجتمعك المهني.
So to answer in step by step basis;
Initially the asset is recognised:
Dr. Asset @ Cost
Cr. Loan account or bank account.
Annually depreciation is recognised.
Dr. Depreciation P&L
Cr. Accumulated depreciation - SFP
Then asset is revalued:
Dr. Asset new value at the beginning of financial year (revaluation)100%Dr. Accumulated depreciation (the value at beginning of the year)
Cr. Asset @ Cost (Initial)
Cr. Revaluation reserve (OCI)
There would be deferred tax effect as well, but leaving this out of the entries.
Each year the asset will continue to be depreciated over the remaining useful life.
The revaluation reserve will also unwind reducing over the useful life of the asset.
Now the sale:
Dr. Accumulated depreciation
Dr. Revaluation reserve (OCI)
Dr. Deferred Tax balance (SFP)
Dr. Bank with the proceeds on sale
Cr. Asset @ revaluation
Cr. Income Tax (Income Statement)
Cr. balancing figure is the profit on sale.
Thank you, it was a great question.
DR - CASH
DR- ACCUMULATED DEPRECIATION8
CR - ASSETS
CR - OTHER GAIN ( gain from assets sales ) 3
Dr : Cash
Cr:NBV of Asset
Cr Profit on assets (credit to p & L).
Previous revalued gain transferred from Other comprehensive income.