Treatment of Revaluation Surplus

Hi.. while revaluing the assets, how do we treat the revaluation surplus...

 

Please advise.

Replies (4)

If there is a revaluation surplus Cr. Baln in ur books of say Rs.1000 and the W.D.V. was Rs.500 and now has decreased to Rs.450 aftter revaluation then entry would be:

Revaluation A/c...Dr      50

To Fixed Asset A/c                50

(Revaln A/c Baln=500-50=450)

If there is a revaluation surplus Cr. Baln in ur books of say Rs.1000 and the W.D.V. was Rs.500 and now has incresed to Rs.600 aftter revaluation then entry would be:

Fixed Asset A/c Dr.... 100

To Revaluation A/c            100

(Revaln A/c Baln =500+100=600)

 

Regards,

 

I dont think so, i think a portion of revaluation surplus each year is transferred to Retained Earning (Revaluation Gains). This is i think as per IAS. i

I am not definite hence asking.

Agreed the portion of Revaluation surplus is transferred to retained earnings (which i have already mentioned in the reply, i.e. Revaluation Surplus has already a Credit Balance of Rs.500) in the books but the same cannot be used to declare Dividend ... It would be much more helpful if u could be much more clear and tell me what is wrong in the treatment i have given.... 

Regards,

The revaluation surplus is usually transfered to the retained earnings or to Reserves & surplus in the case of companies ie., the entry would be

Revaluation Surplus/profit A/c Dr.

Reserves and Surplus Cr.

In the case of partnership firms, the revaluation surplus is transfered to the partners' capital account.

Revaluation surplus/profit A/c Dr

Partners Capital Cr.

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