Depreciation on revalued assets
This query is : Resolved
17 September 2011
Dear Experts
Review this Thread and Let me know how to treat Depreciation on Revalued assets
To my Knowledge
AS per AS-6 " Depreciation Accounting"
The amount of Depreciation is Calculated on Historical Cost or the other amount in place of Historical Cost like Revalued Amount
So, the depreciation should be charged on the basis of revalued amount and the same will be debited to profit and loss account
But A disclosure should be made for effect of revaluation of fixed asset on the amount of depreciation in subsequent years
Here is thread
https://www.caclubindia.com/forum/details.asp?mod_id=167777&offset=1
Review this Thread and Let me know how to treat Depreciation on Revalued assets
To my Knowledge
AS per AS-6 " Depreciation Accounting"
The amount of Depreciation is Calculated on Historical Cost or the other amount in place of Historical Cost like Revalued Amount
So, the depreciation should be charged on the basis of revalued amount and the same will be debited to profit and loss account
But A disclosure should be made for effect of revaluation of fixed asset on the amount of depreciation in subsequent years
Here is thread
https://www.caclubindia.com/forum/details.asp?mod_id=167777&offset=1
18 September 2011
In case of revaluation, the depreciation is calculated on the total revalued amount over a period of balance useful lives assessed on the date of revaluation. New cost for the purpose of depreciation will be gross cost less accumulated depreciation on the date of revaluation.
Along with this, the revaluation reserve is amortised to the income statement based on the useful life of the asset to which it relates. This is done to ensure that depreciation on the revalued amounts shouldn’t inflate/ deflate the income statement.
Example: On 1 Jan 2010 the gross cost of asset if 100 and accumulated depreciation is 20. On this date the asset cost is revalued by 50 with the remaining life of the asset to be 10 years. So the relevant cost for the purpose of calculating depreciation is 130(100-20+50).
Assuming a case of straight line depreciation, the depreciation charge will be 13 (130/10). In the same manner, the current year amortisation of revaluation reserve is 5 (50/10). Thus, the net impact on income statement is only 8 (13-5).
Hope that above will help you.
Along with this, the revaluation reserve is amortised to the income statement based on the useful life of the asset to which it relates. This is done to ensure that depreciation on the revalued amounts shouldn’t inflate/ deflate the income statement.
Example: On 1 Jan 2010 the gross cost of asset if 100 and accumulated depreciation is 20. On this date the asset cost is revalued by 50 with the remaining life of the asset to be 10 years. So the relevant cost for the purpose of calculating depreciation is 130(100-20+50).
Assuming a case of straight line depreciation, the depreciation charge will be 13 (130/10). In the same manner, the current year amortisation of revaluation reserve is 5 (50/10). Thus, the net impact on income statement is only 8 (13-5).
Hope that above will help you.
18 September 2011
Sir
I have been searching the contents of Accounting Standards which says the treatment you did for Revaluation Reserve.
Does it mentioned in any Standard or it just an accounting policy to ensure that the depreciation on the revalued amounts should not inflate/ deflate the income statement
I have been searching the contents of Accounting Standards which says the treatment you did for Revaluation Reserve.
Does it mentioned in any Standard or it just an accounting policy to ensure that the depreciation on the revalued amounts should not inflate/ deflate the income statement
22 September 2011
I closing my query
I confirmed that it just an accounting policy and not a mandatory treatment to follow
I confirmed that it just an accounting policy and not a mandatory treatment to follow
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Post Office RD Interest
- Applicable TDS for Purchase of Flat from NRI
- Eway bill for machinery reparing
- Building and other construction workers welfare cess act 1996
- Gift of mutual fund units to daughter
- Bank Accounts in Balance Sheet for ITR 3
- ITR 3 FILING OF AN INDIVIDUAL (PARTNER IN A PARTNERSHIP fIRM)
- Reporting of STCG on Property in ITR
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
