Revaluation increase

Learning objectives

• Recognise an increase arising on revaluation in OCI or in profit or loss depending on the history of the asset.L3
• Calculate the portion of the increase recognised in profit or loss and the portion recognised in OCI.L3

Normative references

• IAS 38 §85Increase arising on revaluation: in OCI (revaluation surplus in equity), except to the extent that it reverses a previous decrease of the same asset recognised in profit or loss.

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

8 questions

• At 31 December 20X2, Armement Kerdual revalues for the first time a transferable fishing licence acquired for {cost}, whose accumulated amortisation amounts to {accumulated_amortisation}. Its fair value, measured by reference to an active market, is {fair_value}. The entity eliminates the accumulated amortisation against the gross carrying amount of the asset. No decrease in value has previously been recognised. The whole class of fishing licences to which this asset belongs, traded on that active market, is revalued at the same date. Ignore deferred tax effects. Calculate the revaluation surplus recognised in other comprehensive income and the gross carrying amount of the licence after revaluation.L3
• Taxis Solenne applies the revaluation model to its taxi licences, which are traded on an active market. At 30 June 20X3, a licence bought for {cost} shows accumulated amortisation of {accumulated_amortisation}; its fair value at that date reaches {fair_value}. Under its accounting policy, Taxis Solenne restates the gross carrying amount proportionately to the change in carrying amount. This asset has never suffered a decrease. Ignore deferred tax effects. Calculate the revaluation surplus and the accumulated amortisation after revaluation.L3
• An entity applies the revaluation model to an intangible asset. At a previous revaluation, a decrease in the value of this asset was recognised in profit or loss. At the following year-end, the asset's fair value increases. How is this increase recognised?L3
• Taxis Orvanne revalues its class of taxi licences. Last year, licence No. 12 suffered a decrease of 15,000 recognised in profit or loss; licence No. 27, which has never suffered a decrease, did not change. This year, only licence No. 27 sees its fair value increase by 15,000. How is this increase recognised?L3
• 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
• Les Vergers Haldane hold a transferable irrigation right, with an indefinite useful life and not amortised, revalued by reference to an active market. At the previous revaluation, a decrease of {previous_decrease_in_pl} was recognised in profit or loss for this right, bringing its carrying amount down to {carrying_amount}. No other revaluation has taken place since. At the year-end, its fair value amounts to {fair_value}. Ignore deferred tax effects. Calculate the portion of the increase recognised in profit or loss and the portion recognised in other comprehensive income.L3
• Pêcheries du Ponant hold a transferable fishing authorisation, with an indefinite useful life and not amortised, measured under the revaluation model. At the previous revaluation, a decrease of {previous_decrease_in_pl} was recognised in profit or loss for this asset, whose carrying amount was brought down to {carrying_amount}. At the year-end, fair value measured by reference to the active market is {fair_value}. Ignore deferred tax effects. Record the revaluation entries.L3
• Taxis Bellerive apply the revaluation model for the first time to a taxi licence traded on an active market. This licence, bought for {cost}, is amortised: its accumulated amortisation reaches {accumulated_amortisation}, while the market values it at {fair_value}. Bellerive eliminates the accumulated amortisation against the gross carrying amount. The licence has never suffered a decrease. The whole class of taxi licences to which this asset belongs, traded on that active market, is revalued at the same date. Ignore deferred tax effects. Record the single revaluation entry.L3