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LenaWriter
1 month ago
7

Synergy Ltd. purchased a building in 2008 for €20,000,000 and as of December 31, 2014 had recorded accumulated depreciation on t

he building of €6,000,000. On December 31, 2014, the company conducted its first revaluation when the fair value was €24,000,000. Under IAS 16, the journal entry recorded on this date would include:
Business
1 answer:
Free_Kalibri [3.7K]1 month ago
5 0

Answer:

According to IAS 16, the journal entry recorded for this date will consist of:

Debit Building (cost = €24m -€20m) €4,000,000

Debit Accumulated depreciation - Building €6,000,000

Credit Revaluation reserve (Gain on revaluation) €10,000,000

(To acknowledge the building's revaluation)

Explanation:

Per IAS 16, any gains from asset revaluation are always credited to Equity, specifically to the revaluation reserve, unless they reverse any previously identified losses on the asset in the income statement. In that instance, the revaluation gains would be recorded in the income statement.

Revaluation gains are considered unrealized until the assets are sold or removed from the records.

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