Revaluation decrease

Learning objectives

• Recognise a decrease arising on revaluation in OCI, then in profit or loss.L3
• Calculate the OCI / profit or loss split of a decrease arising on revaluation.L3

Normative references

• IAS 38 §86Decrease arising on revaluation: in profit or loss, except to the extent of any credit balance in the revaluation surplus for the same asset (OCI).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

7 questions

• Laiterie Morvelle holds a milk production quota acquired for {initial_amount} on 1 January 20X1. The quota, whose useful life is indefinite, is not amortised; it is measured under the revaluation model by reference to an active market. Its fair value is {fair_value_20x1} at 31 December 20X1, then {fair_value_20x2} at 31 December 20X2. Ignore deferred tax effects. Calculate, for 20X2, the portion of the increase recognised in profit or loss and the portion recognised in other comprehensive income.L3
• A revalued intangible asset has a revaluation surplus with a credit balance of 20,000 in equity. At the year-end, its fair value decreases by 35,000. How is this decrease recognised?L3
• Coopérative Sylvaine revalues its class of production quotas. The North quota has a revaluation surplus with a credit balance of 40,000; the South quota has never been revalued upwards. At the year-end, only the fair value of the South quota falls, by 10,000. How is this decrease recognised?L3
• Sucrerie Vallarde holds a transferable sugar beet production quota, with an indefinite useful life and not amortised, measured under the revaluation model. Before the year-end revaluation, its carrying amount is {carrying_amount} and the revaluation surplus relating to this quota has a credit balance of {surplus_balance}. Fair value measured by reference to the active market is {fair_value}. Ignore deferred tax effects. Calculate the portion of the decrease recognised in other comprehensive income and the portion recognised in profit or loss.L3
• Air Méridane owns a transferable landing slot, not amortised because its useful life is indefinite, which it revalues by reference to an active market. The revaluation surplus accumulated for this slot amounts to {surplus_balance}. At the reporting date, the slot is carried at {carrying_amount} before revaluation, while the market now values it at {fair_value}. Ignore deferred tax effects. Which portions of the decrease go to other comprehensive income and to profit or loss respectively?L3
• Domaine Castelmaure holds transferable vine planting rights, with an indefinite useful life and not amortised, revalued by reference to an active market. Before the year-end revaluation, their carrying amount is {carrying_amount} and the related revaluation surplus has a credit balance of {surplus_balance}. Their fair value is now {fair_value}. Ignore deferred tax effects. Record the revaluation entries.L3
• Armement Kerlouan applies the revaluation model for the first time to a transferable individual fishing quota, amortised over its finite useful life. The quota cost {cost} and its accumulated amortisation amounts to {accumulated_amortisation}. The active market values it at {fair_value}. The entity eliminates the accumulated amortisation against the gross carrying amount. The whole class of fishing quotas to which this asset belongs, traded on that active market, is revalued at the same date. Ignore deferred tax effects. Record the revaluation entry.L3