IAS 16 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Revaluation: Hotel B — 31 December 20X5
Hotels: the revaluation model over three years
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 16 workpaper
- Level
- Advanced
- Estimated time
- ≈ 60 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Groupe Azur Hôtels (a fictitious company) acquired three hotels that it operates itself (A, B and C) on 1 January 20X1. From acquisition, it chose the revaluation model for the class 'operated hotels'. Its reporting date is 31 December. The hotels are depreciated on a straight-line basis over 40 years with no residual value. Group policy provides for an external valuation every 3 years, or earlier if the market moves significantly, and for the annual transfer of the realised revaluation surplus to retained earnings. A fourth building (D) is leased to a tour operator.
Assignment
'Revaluation' workpaper: asset-by-asset tracking of the revaluation surplus, the transfers and the cost-model amount.
Purpose of the workpaper
For an asset of a class measured under the revaluation model, enter the carrying amount before revaluation and the fair value from the valuation report, deal with accumulated depreciation, then allocate the difference between profit or loss and other comprehensive income, taking into account the existing revaluation surplus and previous decreases of the same asset. The annual transfer of the surplus to retained earnings is documented in the dedicated section. One workpaper per asset and revaluation date.
Questions of the file covered by this workpaper
- Calculate the accumulated depreciation to be eliminated at 31 December 20X3.
- Calculate the revaluation differences at 31 December 20X3 and their split between profit or loss and other comprehensive income.
- Calculate hotel A's depreciation from 20X4, the annual transfer of the realised surplus and the balance of A's surplus at 31 December 20X5.
- Calculate the accumulated depreciation to be eliminated at 31 December 20X5.
- Calculate the revaluation differences at 31 December 20X5 and their split.
- What is the impact of these entries on the 20X5 financial statements, and what must be disclosed in the notes?
Documents in the file
Open the documents to pick out the relevant information.