lucasg85

Trekker Wrote:
-------------------------------------------------------
> ??
>
> Let me work through an example:
>
> Begin B/S:
> PPE: 30
> Other Asset: 70
> Liability: 50
> Equity: 50
>
> 1) Assume PPE is impaired by 10, then:
>
> I/S: record loss of 10
>
> B/S:
> PPE: 20
> Other Asset: 70
> Liability: 50
> Equity: 40 (-10 reflected through RE)
>
>
> 2) Assume PPE is revalued to 40, then:
>
> I/S: record gain of 10
>
> B/S:
> PPE: 30 (revalued up to the original cost)
> Other Asset: 70
> Liability: 50
> Equity: 60 (+10 reflected through RE AND +10 as
> part of OCI, fair value over original cost)
>
>
> Asset requires +10 to be balanced - which ACCOUNT
> do we increase?


As far as I remember, only inventory is revalued up to original amount written-down .. So if you have revalued inventory down to 20 then value goes up to 40

you will have inventory 30
gain +10 only .. not 20

For PPE, you will revalue it in this case to 40 - not only 30 ..

you will have PPE 40
gain +10 in Income Statement (amount previously written off) and 10 in OCI

That's my understanding