upward revaluations

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tarik64

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Under IFRS when there are upward revaluations more so than the original write down they say that it is reflected directly in equity? I’m not sure how this works. Can someone just explain a simple example like if the historical cost was 90, it was written down to 80 and then the fair value went back up to 100, how this would be reflected in the I/S and balance sheet.
Thanks
 
Ok. When the fair value of an asset falls to 80 from 90, we report a loss of -10 in PL. When the value recovers and becomes equal to 100, we will report a gain of +10 in PL (to extent of our previously reported loss) and then we’ll put +10 directly to the equity (through other comprehensive income AFAIR).
If an asset value then falls back to 80 we will do the opposite: reflect -10 in equity (to the extent of previously reported appreciation) and then -10 in the PL.
 
alright thanks so basically the other comprehensive income acts as your adjustment to equity since the additional gain is not going directly in your income statement. makes snese.
 
yes, think of OCI as a “holding place” where unrealized gains & losses go. Whats up Tarik- its Sherman, good to see you on here.
 
sherman haha what’s up buddy. Appreciate the help. I’m sure you’ll see more of my questions on here as we get closer to the exam.
 
I finished all the readigns and am doign the CFA problems now. Just got through most of accounting. Gonna move on to fixed income and equity then quant, econ and corp finance/portfolio mgmt. Hoping to be done with those or most of that with 3 weeks to go so by like November 10th or so then gonna start doing all the practice exams I got and savings most of ethics until the end. Just trying tog et through as many problems as possible.
 
good ideas, most people wont even touch the CFAI EOCs (end of chapter problems)
 
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