Page 66 - SBR Integrated Workbook STUDENT S18-J19
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Chapter 5
Example 1
PPE
Oliphant has a year end of 31 December. It purchased a building for $50
million on 1 January 20X1 and attributed it a useful economic life of 50 years.
Oliphant classified the building as PPE and accounted for it using the
revaluation model.
On 31 December 20X2, the fair value of the building was deemed to be $53
million. The total useful economic life of the building remained unchanged.
By 31 December 20X3, there was a collapse in property prices. The fair value
of the building was deemed to be $44 million.
Oliphant does not perform a reserves transfer for the excess depreciation
arising from a revaluation.
Discuss how the above events should have been accounted for.
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