Revaluation reserve

Revaluation reserve

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I have recently taken role as finance manager for a group of companies, one of which is audited.The accounts extracts are :-

2009

Tangible assets : land and property £900,000 Debit

Revaluation Reserve £600,000 Credit

(so I assume historical cost of £300,000; No depreciation anywhere including historical cost depn note)

2010

Tangible assets : land and property £nil

Stocks & WIP : £2,000,000

Revaluation Reserve £600,000 Credit

2011

I have to prepare the accounts. My gut feel was that there should not be a revaluation reserve which, my professional body confirmed. They said to get rid of it as an exceptional item on face of P&L. My thinking is that I need to :-

  • Have an exceptional profit on face of P&L as a PYA (ie restate 2010 uplifting profit by £600,000)
  • Restate comparitive STRG&L where the revaluation reserve is unwound
  • Explanatory notes

QUESTION

YE stock is about £500k so i am guessing there will be a big PCTCT which logically is correct with a uplift in value of £600k. is my thinking on the accounting transactions correct ?

Replies (3)

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Euan's picture
By Euan MacLennan
04th Oct 2012 11:15

Deleted

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Euan's picture
By Euan MacLennan
04th Oct 2012 11:15

Please clarify

What happened to the £900,000 of property in 2009?  Are you implying that it was reclassified as stock for resale during 2010 or that it was sold to a third party?  Was there any profit/loss on sale of fixed assets in 2010?

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By floggy
04th Oct 2012 11:40

yes £900,000 of property

yes £900,000 of property reclassified as stock; no profit or loss on disposal in accounts.

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