Reversal of revaluation

Revaluation increase or decrease are recognized in other comprehensive income unless

they represent impairment losses or reversal thereof. Impairment losses and gains on
reversal of impairment are recognized in profit or loss.
Illustration:
The land of Jerome Co. with historical cost of P4,000,000 has fair values of P6,000,000
and P3,500,000 on December 31, 2020 and December 31, 2022 respectively.

Provide the entries to necessary on Dec 31, 2020 and Dec 31, 2022.

12/31/2020
Fair value P6,000,000
CA (4,000,000)
RS P2,000,000

The entry to record the revaluation surplus is as follows:

Land 2,000,00
Revaluation Surplus 2,000,000

12/31/2022
Fair value P3,500,000
CA (6,000,000)
Decrease in CA (P2,500,000)

The decrease in carrying amount is allocated as follows:

Decrease in CA (P2,500,000)
Balance of RS 2,000,000
Excess charge to Impairment loss P500,000

The entry to record the decrease in carrying amount is as follows:

Revaluation surplus 2,000,0000
Impairment loss 500,000
Land 2,500,000