Incrimental depreciation

[Sh.Mohsin]

Dear All;

As per Companies Ordinance, 1984, incrimental depreciation may be charged to revaluation surplus.

Please explain me whether we can charge some portion of this incrimental depreciation to revaluation surplus (say 50%) and all other to profit and loss account.
We have enough revaluation surplus to charge total incrimental depreciation against it.

[faisal_desperado]

Dear,

Both of the discussed options shall ultimately have the same effect on the equity.

Regards,

[Dard]

Wouldn't the incremental depreciation be realised and transfered to retained earnings if the company has a policy to do it?

[Abdul Majid]

Dear

As per IAS 16 Paragraph 41,when the revalued assets are decrognised its surplus will be transferred from revaluation surplus to the retained earnings.
But as Per Companies Ordinance the revaluation surplus is not a part of the equity,so the revaluation surplus will be transferred to the profit and loss account at the time of derognition.
As per companies ordinance company not make ploicy to transfer the surplus to retained earnings.So company cannot make such policy.

Regards,

Majid

[wsafca]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Sh.Mohsin</i>
<br />Dear All;

As per Companies Ordinance, 1984, incrimental depreciation may be charged to revaluation surplus.

Please explain me whether we can charge some portion of this incrimental depreciation to revaluation surplus (say 50%) and all other to profit and loss account.
We have enough revaluation surplus to charge total incrimental depreciation against it.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Dear

As per Companies ordinance

4) After revaluation as aforesaid, depreciation on the assets so revalued shall be provided with reference to the value assigned to such assets before revaluation and surplus on revaluation may be amortized according to life of the assets.

Incremental depreciation shall be charged to Surplus on revaluation.

Definitly if the incremental depreciation has not been charged surplus, at the end balance would remain there, where would you take that ......

Surplus on revaluation has to be amortized over the years,(As per abovementioned section). No other treatment is allowed, thats what
I interprete from ....


Regards

Ahmed

[Sh.Mohsin]

Thanks to all for participation