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    sakura2285's Avatar
    sakura2285 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Mar 10, 2012, 05:08 AM
    Revaluation reserve after sale of asset
    Hi, I am quite confused about what happens to the revaluation reserve after an asset is sold.
    Assuming the asset's original cost was $100, and afterwards get revalued to $150.
    Accounting entry - Dr Asset $50, Cr Revaluation Reserve $50

    When the company sells the asset for $180, the treament is to:
    Dr Cash $180, Cr Asset $150, with a Gain on disposal of $30 shown in the P&L.
    Then what happens to the Revaluation Reserve?
    Fidget1's Avatar
    Fidget1 Posts: 105, Reputation: 4
    Junior Member
    		  
    #2

    Feb 18, 2013, 12:15 PM
    It can either be left in the revaluation reserve, or transferred to retained earnings.

    If transferred to retained earnings, it must directly transfer to retained earnings i.e. - it must not go through the profit & loss account.
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