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Q5

An item of property, plant and equipment whose fair value can be measured
reliably shall be carried at a revalued amount, being its fair value at the date
of the revaluation less any subsequent accumulated depreciation and
subsequent accumulated impairment losses. Revaluations shall be made
with sufficient regularity to ensure that the carrying amount does not differ
materially from that which would be determined using fair value at the end
of the reporting period.
E15
Determining the amount at which Beech should report its inventory on the
31 December 2012 balance sheet under US GAAP and IFRS
Product

Cost

101
202
303

130
160
100

Replacem
ent
140
135
80

NRV
152
133
95

NRVNPM
120
105
80

US GAAP

IFRS

130
133
80
343

130
133
95
358

E23
a) Adjustment A results in an addition to net income because the
additional depreciation taken on the revaluation amount does not exist
under US GAAP. The addition to net income pertains to the current year
only. The addition to net income in the current year plus the addition to
net income in previous years is the cumulative effect on retained
earnings, which is shareholders equity account affected by adjustment
(a). The additional to shareholders equity is greater than the addition
to net income because of this cumulative effect.
b) Adjustment (b) relates to the revaluation surplus that is recorded when
fixed assests are revalued. This increase does not exist under US GAAP
and shareholders equity must be reduced accordingly. In this case, the
shareholders equity account affected is revaluation surplus.