Accounting

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Nishant Kumar (Querist)
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23 April 2011 Please explain me the meaning of this : "As per Para 30 of AS 10 “Accounting for Fixed Assets”, an increase in net book value arising on revaluation of fixed assets should be credited to owner’s interests under the head of ‘revaluation reserve, except that, to the extent that such increase is related to and not greater than a decrease arising on revaluation previously recorded as a charge to the profit and loss statement, it may be credited to the profit and loss statement. A decrease in net book value arising on revaluation of fixed assets is charged directly to profit and loss statement except that to the extent such a decrease is related to an increase which was previously recorded as a credit to revaluation reserve and which has not been subsequently reversed or utilized , it may be charged directly to that account. "

CA. Deepak Narula

CA. Deepak Narula (Expert)
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23 April 2011 Suppose a fixed asset is for Rs. 100000/-

it is revalued at rs. 90000/- then rs 10000/- can be directly debited to p&l account. further the asset is revauled at rs 110000/- then rs. 10000/- will be credited to p&l account becasue it was previously debited to p&l account. balance rs 10000/- will be credited to revaluation account.

in second case, asset is revalued at rs 110000 for the first time. then it will be credited to revaluation account and will be shown in balance sheet. now further it is revalued at rs 90000/- then rs 10000/- will be first debited to revaluation account to sqaure off that account and balance 10000/- will be debited to p&l account.

i hope above simple example is helpful for u.

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Nishant Kumar

Nishant Kumar (Querist)
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23 April 2011 Thank You Sir! It was indeed very helpful! :)

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