Two years after the impairment, Cobalt Ridge’s crusher has a carrying amount of 228,000. Its recoverable amount is now 420,000. Had no impairment been recorded, the carrying amount would be $300,000. Record the reversal under IFRS.
Two years after the impairment, Cobalt Ridge’s crusher has a carrying amount of 228,000. Its recoverable amount is now 420,000. Had no impairment been recorded, the carrying amount would be $300,000. Record the reversal under IFRS.
Answer
Dr Accumulated Depreciation—Crusher 72000; Cr Reversal of Impairment Loss 72000
Accounts - Accumulated Depreciation—Crusher - Reversal of Impairment Loss - Impairment Loss - Crusher - Gain on Revaluation - Retained Earnings Reversal = MIN(recoverable 420,000, never-impaired 300,000) − 228,000 = 72,000. Debit accumulated depreciation (the account the loss went to) and credit the reversal to profit or loss. The trap is 192,000 — reversing all the way to the recoverable amount is a revaluation, not a reversal — and Gain on Revaluation is the revaluation-model account that goes with that mistake.
L1 §10.3.1, §10.6; IAS 36 ¶114, ¶117, ¶119 (verified-facts 2.5-5)