IAS 38Chapter 8Lesson 2
The revaluation model: active market, increases and decreases
Step 1 of 5Learning objectives
Go deeper+3 deeper insights · +1 calculation · +1 journal entry · +1 point of attention
The revaluation model carries the intangible asset at fair value, but only if that fair value is measured by reference to an active market, which is rare for intangibles. The lesson explains its conditions and limits, what happens to accumulated amortisation, how increases (in other comprehensive income, unless they reverse a past decrease) and decreases (in profit or loss, unless charged against the revaluation surplus) are recognised, and the transfer of the surplus to retained earnings, through a numerical example with two successive revaluations.
30 minNot started
Learning objectives
- Determine whether the revaluation model can be applied, given whether an active market exists and the model's limits.
- Calculate the revaluation difference and deal with accumulated amortisation at the revaluation date.
- Split an increase or decrease in value between other comprehensive income and profit or loss, according to the asset's history.
- Record the transfer of the revaluation surplus to retained earnings, without going through profit or loss.