Property Revaluation: Revaluation Reserve Treatment After Disposal

CaseWareAccounting Standards, Carmen Ridley, CaseWare News, Financial Reporting, opinion

Revalutaion Property Q&A

From Carmen Ridley, (CaseWare Financial Reporting content expert, AASB member & Principal – Australian Financial Reporting Solutions) an interesting client query and her answer.

Q: My client has sold a property that was previously held under the revaluation model – what should I do with the revaluation reserve in relation to that property now that the property has been disposed?

Carmen’s Response: The revaluation reserve relating to that asset is transferred to retained earnings since it is not permitted to be ‘recycled’ through profit or loss – the transfer will be shown in the statement of changes of equity.